City of Ann Arbor, Comprehensive Year Ended June 30, 2016 · Top 15 2016 Best Public High Schools in Michigan (Huron No. 7, Community No. 8, Skyline No. 10, Pioneer No. 12), k.12niche.com

City of Ann Arbor, Michigan

Comprehensive Annual Financial

Report

Year Ended June 30, 2016

This page intentionally left blank.

(734) 794-6500

Financial and Administrative Services

Fiscal Year Ended June 30, 2016

Accounting Services Unit301 East Huron Street

Ann Arbor, Michigan 48107

CITY OF ANN ARBOR

COMPREHENSIVE ANNUAL FINANCIAL REPORT

County of Washtenaw State of Michigan

Prepared by:


CITY OF ANN ARBOR, MICHIGAN

Table of Contents

Page

INTRODUCTORY SECTION

Letter of Transmittal 1Elected and Appointed Officials 6Organizational Chart 7GFOA Certificate of Achievement 8

FINANCIAL SECTION

Independent Auditors’ Report 11Management’s Discussion and Analysis 16Basic Financial Statements

Government-wide Financial Statements:Statement of Net Position 29Statement of Activities 30

Fund Financial Statements:Balance Sheet – Governmental Funds 34Reconciliation of Fund Balances of Governmental Funds to Net

Position of Governmental Activities 35Statement of Revenues, Expenditures and Changes in Fund Balances –

Governmental Funds 36Reconciliation of Net Changes in Fund Balances of Governmental Funds

to Change in Net Position of Governmental Activities 37Statement of Revenues, Expenditures and Changes in

Fund Balance – Budget and Actual: General Fund 38Street Repair Millage Special Revenue Fund 41

Statement of Net Position – Proprietary Funds 42Reconciliation of Net Position of Enterprise Funds

to Net Position of Business-type Activities 45Statement of Revenues, Expenses and Changes in Fund

Net Position – Proprietary Funds 46Reconciliation of Changes in Net Position of Enterprise Funds

to Changes in Net Position of Business-type Activities 49Statement of Cash Flows – Proprietary Funds 50Statement of Fiduciary Net Position 54Statement of Changes in Fiduciary Net Position 55Combining Statement of Net Position – Discretely Presented Component Units 58Combining Statement of Activities – Discretely Presented Component Units 59

Notes to Financial Statements 62

Required Supplementary InformationEmployees' Retirement System 108Retiree Healthcare Trust Fund 112


Table of Contents

Page

Combining and Individual Fund Financial Statements and SchedulesCombining Balance Sheet – Nonmajor Governmental Funds 117Combining Statement of Revenues, Expenditures and Changes in Fund

Balances – Nonmajor Governmental Funds 125Schedule of Revenues, Expenditures and Changes in Fund

Balances – Budget and Actual – Nonmajor Special Revenue Funds 133Combining Statement of Net Position – Internal Service Funds 156Combining Statement of Revenues, Expenses and Changes in Fund Net

Position – Internal Service Funds 158Combining Statement of Cash Flows – Internal Service Funds 160Combining Statement of Fiduciary Net Position -

Pension and Other Employee Benefits Trust Funds 164Combining Statement of Changes in Fiduciary Net Position -

Pension and Other Employee Benefits Trust Funds 165Combining Statement of Assets and Liabilities – Agency Funds 166Combining Statement of Changes in Assets and Liabilities – Agency Funds 168Component Unit Balance Sheet - SmartZone Local Development Finance Authority 170Component Unit Statement of Revenues, Expenditures and Changes in

Fund Balance - SmartZone Local Development Finance Authority 171

STATISTICAL SECTION (UNAUDITED)

TABLE

1 Net Position by Component 1762 Changes in Net Position 1783 Fund Balances - Governmental Funds 1844 Changes in Fund Balances - Governmental Funds 1865 Taxable Value of Property 1886 Direct and Overlapping Property Tax Rates (per $1,000 of Taxable Value) 1897 Principal Property Taxpayers 1928 Property Tax - Levies and Collections 1959 Ratios of Outstanding Debt by Type 196

10 Ratios of Net General Bonded Debt Outstanding 19811 Direct and Overlapping Governmental Activities Debt 19912 Legal Debt Margin Information 20013 Pledged-revenue Coverage 20114 Demographic and Economic Statistics 20215 Principal Employers 20316 Full-time Equivalent Government Employees by Function/Program 20417 Operating Indicators by Function/Program 20618 Capital Asset Statistics by Function/Program 208

INTRODUCTORY SECTION


November 4, 2016

To the Honorable Mayor, Members of the City Council andCitizens of the City of Ann Arbor

The Comprehensive Annual Financial Report (CAFR) of the City of Ann Arbor for the year ended June 30,2016, is submitted. Staff in the Accounting Services Unit prepared the report, with assistance from thePension System, Downtown Development Authority, Housing Commission and other City staff. The Cityhas the responsibility for all disclosure and accuracy of material contained in this report.

State law requires that all local governments, subject to certain size criteria, publish within six monthsof the close of each fiscal year a complete set of financial statements presented in conformity withgenerally accepted accounting principles (GAAP) and audited in accordance with generally acceptedauditing standards by a firm of licensed certified public accountants. Pursuant to that requirement, wehereby issue the comprehensive annual financial report of the City of Ann Arbor for the fiscal yearended June 30, 2016.

Rehmann, Certified Public Accountants, have issued an unmodified (“clean”) opinion on the City of AnnArbor financial statements for the year ended June 30, 2016. The independent auditor’s report islocated at the front of the financial section of this report.

GAAP require that management provide a narrative introduction, overview, and analysis to accompanythe basic financial statements in the form of Management’s Discussion and Analysis (MD&A). This letterof transmittal is designed to complement the MD&A and should be read in conjunction with it. TheCity’s MD&A can be found immediately following the report of the independent auditors.

This report consists of management’s representations concerning the finances of the City of Ann Arbor.Consequently, management assumes full responsibility for the completeness and reliability of all of theinformation presented in this report. To provide a reasonable basis for making these representations,City management has established a comprehensive internal control framework that is designed both toprotect the government’s assets from loss, theft, or misuse and to compile sufficient reliableinformation for the preparation of the City’s financial statements in conformity with GAAP. Becausethe cost of internal controls should not outweigh their benefits, the City’s comprehensive framework ofinternal controls has been designed to provide reasonable rather than absolute assurance that thefinancial statements will be free from material misstatements. As management, we assert that, to thebest of our knowledge and belief, this financial report is complete and reliable in all material respects.

1

The City of Ann Arbor was founded in 1824 and incorporated as a city in 1851. The City is located inthe approximate center of Washtenaw County in the southeastern section of Michigan’s LowerPeninsula. The City is approximately 28 square miles in area and serves as the County Seat. The Cityhas an excellent public transportation system for its citizens and visitors to enjoy. The City isnationally known for its outstanding educational and medical facilities, serving as the home of theUniversity of Michigan.

Profile of the Government

The City operates under a Mayor/Council-Administrator type of government. The Council is comprisedof the Mayor and ten Council Members. The City is divided into five wards; two Council Members areelected from each ward. The Council appoints a City Administrator to serve as the Chief AdministrativeOfficer of the City responsible for daily operations. The organizational chart of the City is shownfollowing the transmittal letter.

The City is responsible for managing and financing many of the services for its citizens. The serviceareas include: Community Services, Financial Services, Safety Services, and Public Services. The Cityprovides a full range of services including: police, fire, the construction and maintenance of streets andother infrastructure, refuse collection and disposal, recycling collection and processing, recreation,social services by contract, public improvements, planning and zoning, and general administrativeservices. The citizens and visitors to the City enjoy these services.

The City Administrator is required by City Charter to prepare and submit an annual budget to CityCouncil. This budget is prepared on the modified accrual basis and is adopted by City Council asrequired by the State of Michigan. Budgetary control is maintained at the service area level for theGeneral Fund. The City Administrator is authorized to transfer budgeted amounts within the GeneralFund service areas. Budgetary control for all other funds is maintained at the fund level. Revisions to aservice area total of the General Fund or to the fund total must be approved by City Council. It is theCity’s policy to try to match one time expenditures to revenues to the extent possible.

Certain services are provided through a legally separate component unit. The City includes one blendedcomponent unit and three discretely presented component units in the City’s financial reporting entitybecause of the significance of their operational or financial relationships with the City. In accordancewith generally accepted accounting principles, these financial statements present the City (the primarygovernment) and its component units. The Ann Arbor Building Authority is presented as a blendedcomponent unit, the Authority is reported as if it were part of the primary government because its solepurpose is to issue revenue bonds to finance major capital construction by the City The DowntownDevelopment Authority, Ann Arbor Housing Commission and SmartZone Local Development FinanceAuthority (SmartZone LDFA) are all presented as discretely presented component units of the City.Additional information on all of these legally separate entities can be found in the notes to the financialstatements.

2

Tree City USA (35th year), Arbor Day Foundation . Certified Bee City USA Affiliate. Top City Secretly Great for Tech Grads (No. 6 ), DataFox . Best Place in the United States for K-12 Teachers to Live and Work (No. 3), GoodCall .

10 Best College Towns (No. 5), Livability.com. Top 100 Best Places to Live 2016, Livability.com. Gold Recognition, Michigan Green Communities . Best Mid-Size City for Making a Living (No. 6), MoneyGeek.com. Best City for Women in the Workforce 2016 (No. 7), NerdWallet. Best Cities to Live In 2016 (No. 4), Niche.com . Walk Friendly Community (one of seven in the U.S.), The Pedestrian an d Bicycle Information Center . Most Walkable Mid-sized Midwest Neighborhood (No. 1), Redfin. First Center of Excellence for Intelligent Traffic Technology , Siemens . Best Green City in the U.S. for Families (No. 5), SmartAsset . Most Environmentally Friendly City (No. 16), ValuePenguin. Most Educated City 2016 (No. 1), WalletHub.com.

The City takes pride in the service provided to its citizens and the community’s well-earned reputation;2016 honors include:

Ann Arbor is accessible by three major Interstate highways connecting Detroit to the east, Chicago tothe west, the Upper Peninsula to the north, and Ohio to the south.

Top 15 2016 Best Public High Schools in Michigan (Huron No. 7, Community No. 8, Skyline No. 10, Pioneer No. 12), k.12niche.com.

The City of Ann Arbor is starting to see economic improvements take traction in its local economy. Thelocal area unemployment rate had declined to 3.5% as of June 2016, receipts from sales taxes haveincreased modestly, and residential property values are increasing, primarily due to new construction.Offsetting some of this economic improvement are State laws limiting property tax revenues along withlegislative uncertainty of funds provided by the State to the City.

Local Economy

The City is endowed with several major corporations located within its boundaries such as Google. Inaddition, Ann Arbor is home to one of the largest employers in the county, the University of Michigan,which employs approximately 46,000 people. Ann Arbor is also known for its excellent technologyinfrastructure that has attracted several large technology firms to the area.

The City has two higher educational centers: 1) The University of Michigan and; 2) Concordia College.Additionally, located within a 10-mile radius are two other higher educational centers.

The City of Ann Arbor has the largest population base in Washtenaw County and serves as the CountySeat. The U.S. Census Bureau identified 113,932 residents in Ann Arbor, representing 33% of thepopulation base in Washtenaw County. The median household income of our citizens is $85,110.Personal income in the City has risen in recent years, which is an indication of a healthy economy.

The City continues to experience increased expenses related to inflation and energy costs. The Citycontinues to constrain its increase in total expenditures through efficiencies, collaborativeopportunities, and through the fiscal discipline of its financial policies.

3

Major Initiatives

Wastewater Treatment Plant

The City has adopted and adheres to several financial management policies governing debt,investments, fund balance, pension funding, other postemployment benefits funding and capitalimprovements. These policies govern the management of resources including use of one-time funds,sale and defeasance of bonds, and investment strategy. With respect to the pension and otherpostemployment benefits funding policies, to the extent that a fully funded plan has not been achieved,the City funds the higher of the actuarially required contribution or the existing level of fundingadjusted annually by an increase of at least 2%.

The Ann Arbor Wastewater Treatment Plant (WWTP) receives and treats approximately 18.0 milliongallons of wastewater per day from the City of Ann Arbor, Pittsfield, Scio, and Ann Arbor townships.Due to aging and deteriorating facilities, two renovation projects, the Facilities Renovations Projectand the Residuals Handling Improvements Project, have been implemented to ensure long-termtreatment capacity and reliability. The Residuals Handling Improvements Project was completed at aconstruction cost of $50,492,258. This project replaced the worn and inefficient residual solidsprocessing equipment and renovates the existing structure housing the process equipment. Additionalitems such as odor management and treatment were also addressed.

Relevant Financial Policies

The City Council and City Administrator are committed to strategies designed to ensure the long-termfinancial health of the City. The City’s financial policies have not changed significantly and anemphasis on strategic planning is being implemented.

During this economic environment, the City will strive to maintain an assigned and unassigned GeneralFund fund balance with a minimum of 15% to 20%. If it is necessary to use these funds, subsequentbudgets will be planned for additions to restore fund balance. The City continues to manage itsoperating expenditures within levels supported by recurring revenues. The City is also striving tobudget a consistent level of capital outlay sufficient to maintain current infrastructure.

Long-term Financial Planning

Facilities Renovation Project (construction cost = $109,512,731)This project consists of upgrading, rehabilitating and/or replacing the aging and deteriorating facilitiesat the WWTP. The WWTP consists of an older West Plant (constructed in the 1930’s) and a newer EastPlant (constructed in the late 1970’s). The Facilities Renovations Project is split into two phases,thereby providing significant construction and financial benefits. The first phase is the Storage BuildingDemolition and Improvements Project, which includes demolition of the Solids Re-aeration Tank and theOld Solids Storage Building, as well as some minor electrical modifications. The first phase iscompleted. The second phase of the Facilities Renovations Project includes complete replacement ofthe older West Plant, improvements to newer East Plant and replacement of the plant electrical gridand stand-by generators. The second phase project is State Revolving Funds funded and is 89%completed.

4

5


ELECTED AND APPOINTED OFFICIALS

Christopher Taylor, Mayor

Council Members

Sumi Kailasapathy Sabra BriereKirk Westphal Jane LummJulie Grand Zachary Ackerman

Graydon Krapohi Jack EatonChuck Warpehoski Chip Smith

Karen M. Lancaster Matthew V. Horning Finance Director City Treasurer

Stephen K. Postema Jacqueline Beaudry City Attorney City Clerk

Howard LazarusCity Administrator

Tom Crawford Chief Financial Officer

6


Organizational Chart

7

8

FINANCIAL SECTION

9


10

Rehmann Robson

675 Robinson Rd. Jackson, MI 49203 Ph: 517.787.6503 Fx: 517.788.8111 rehmann.com

CPAs & Consultants Wealth Advisors Corporate Investigators

Rehmann is an independent member of Nexia International.

INDEPENDENT AUDITORS' REPORT

November 4, 2016

To the Honorable Mayor and Members of the City Council

City of Ann ArborAnn Arbor, Michigan

Report on the Financial Statements

We have audited the accompanying financial statements of the governmental activities, the business-type activities, the aggregate discretely presented component units, each major fund, and the aggregateremaining fund information of the City of Ann Arbor, Michigan (the "City"), as of and for the year endedJune 30, 2016, and the related notes to the financial statements, which collectively comprise the City’sbasic financial statements as listed in the table of contents.

Management's Responsibility for the Financial Statements

Management is responsible for the preparation and fair presentation of these financial statements inaccordance with accounting principles generally accepted in the United States of America; this includesthe design, implementation, and maintenance of internal control relevant to the preparation and fairpresentation of financial statements that are free from material misstatement, whether due to fraud orerror.

Independent Auditors’ Responsibility

Our responsibility is to express opinions on these financial statements based on our audit. We did notaudit the financial statements of the Ann Arbor Housing Commission, which represents 13.4% of theassets and 38.3% of the revenues of the aggregate discretely presented component units. Thosestatements were audited by other auditors whose report was furnished to us, and our opinion, insofar asit relates to the amounts included for the Ann Arbor Housing Commission, is based solely on the report ofthe other auditors. We conducted our audit in accordance with auditing standards generally accepted inthe United States of America and the standards applicable to financial audits contained in Government Auditing Standards, issued by the Comptroller General of the United States. Those standards requirethat we plan and perform the audit to obtain reasonable assurance about whether the financialstatements are free of material misstatement.

11

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures inthe financial statements. The procedures selected depend on the auditors’ judgment, including theassessment of the risks of material misstatement of the financial statements, whether due to fraud orerror. In making those risk assessments, the auditor considers internal control relevant to the entity’spreparation and fair presentation of the financial statements in order to design audit procedures that areappropriate in the circumstances, but not for the purpose of expressing an opinion on the effectivenessof the entity’s internal control. Accordingly, we express no such opinion. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of significantaccounting estimates made by management, as well as evaluating the overall presentation of thefinancial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis forour audit opinions.

Opinions

In our opinion, based on our audit and the report of the other auditors, the financial statements referredto above present fairly, in all material respects, the respective financial position of the governmentalactivities, the business-type activities, the aggregate discretely presented component units, each majorfund, and the aggregate remaining fund information of the City of Ann Arbor, Michigan, as of June 30,2016, and the respective changes in financial position and cash flows, where applicable, thereof and therespective budgetary comparisons for the general fund and major special revenue fund for the year thenended in conformity with accounting principles generally accepted in the United States of America.

Other Matters

Required Supplementary Information

Accounting principles generally accepted in the United States of America require that management’sdiscussion and analysis and the schedules of pension and other postemployment benefits informationlisted in the table of contents be presented to supplement the basic financial statements. Suchinformation, although not a part of the basic financial statements, is required by the GovernmentalAccounting Standards Board, who considers it to be an essential part of financial reporting for placing thebasic financial statements in an appropriate operational, economic, or historical context. We haveapplied certain limited procedures to the required supplementary information in accordance withauditing standards generally accepted in the United States of America, which consisted of inquiries ofmanagement about the methods of preparing the information and comparing the information forconsistency with management’s responses to our inquiries, the basic financial statements, and otherknowledge we obtained during our audit of the basic financial statements. We do not express an opinionor provide any assurance on the required supplementary information because the limited procedures donot provide us with sufficient evidence to express an opinion or provide any assurance.

12

Other Information

Our audit was conducted for the purpose of forming opinions on the financial statements thatcollectively comprise the City’s basic financial statements. The introductory section, combining andindividual fund financial statements and schedules, and statistical section are presented for purposes ofadditional analysis and are not a required part of the basic financial statements. The combining andindividual fund financial statements and schedules are the responsibility of management and werederived from and relate directly to the underlying accounting and other records used to prepare thebasic financial statements. Such information has been subjected to the auditing procedures applied by usand the other auditors in the audit of the basic financial statements and certain additional procedures,including comparing and reconciling such information directly to the underlying accounting and otherrecords used to prepare the basic financial statements or to the basic financial statements themselves,and other additional procedures in accordance with auditing standards generally accepted in the UnitedStates of America. In our opinion, the information is fairly stated in all material respects in relation tothe basic financial statements as a whole.

The introductory section and statistical tables have not been subjected to the auditing proceduresapplied by us and the other auditors in the audit of the basic financial statements and, accordingly, wedo not express an opinion or provide any assurance on them.

Other Reporting Required by Government Auditing Standards

In accordance with Government Auditing Standards, we have also issued our report dated November 4,2016 on our consideration of the City of Ann Arbor’s internal control over financial reporting and on ourtests of its compliance with certain provisions of laws, regulations, contracts, and grant agreements andother matters. The purpose of that report is to describe the scope of our testing of internal control overfinancial reporting and compliance and the results of that testing, and not to provide an opinion oninternal control over financial reporting or on compliance. That report is an integral part of an auditperformed in accordance with Government Auditing Standards in considering the City of Ann Arbor'sinternal control over financial reporting and compliance.

13


14

MANAGEMENT'S DISCUSSION AND ANALYSIS

15


Management's Discussion and Analysis

As management of the City of Ann Arbor, Michigan, we offer readers of the City’s financial statements this narrative overviewand analysis of the financial activities of the City for the fiscal year ended June 30, 2016. We encourage readers to considerthe information presented here in conjunction with additional information that we have furnished in our letter of transmittal,which can be found on page 1 of this report.

Financial Highlights

Government-wide financial statements are comprised of governmental activities, business-type activities and discretelypresented component units. Governmental activities include general fund activities such as public safety and parks andrecreation. Business-type activities include proprietary funds such as water, sewer, and solid waste.

The City’s governmental funds financial statements are prepared using modified accrual basis of accounting and all otherfunds are prepared using the full accrual basis of accounting.

In total, the assets and deferred outflows of resources of the City exceed its liabilities and deferred inflows of resources by $1,052,999,402 at the close of the most recent fiscal year.

Overview of the Financial Statements

$895,019,284 is the net investment in capital assets;$91,111,530 is restricted for specific purposes, such as capital projects;$66,868,588 is unrestricted and may be used to meet the government’s ongoing obligations to citizens and creditors,subject to the purpose of the fund in which they are located. This balance is comprised of $526,826 in governmentalactivities and $66,341,762 in business-type activities.

The City’s major funds, the general fund ($25,135,349) and the street repair millage fund ($13,264,960), account for41% of total fund balance including restricted amounts. The remaining amount is represented across the other 29nonmajor funds.The general fund recognized an increase to fund balance of $2,652,049. The general fund unassigned fund balancedecreased from $17,235,156 to $15,330,765. The end result was an increase in assigned general fund balance of$4,702,763. At the end of the current fiscal year, unassigned fund balance was 19% of the total general fundexpenditures.

The City’s total net position increased by $10,173,900 during the year, primarily due to increases in capital assets andgrowth in unrestricted net position of the water, sewer and storm funds that are setting aside funding for futurepojects.The City’s total debt increased by $12,540,256 (new issues less retirements) during the current fiscal year due to theincreased draws on revolving lines of credit with the State of Michigan that are used to finance stormwater projects andthe wastewater treatment plant construction.

Fund financial statements are comprised of 31 governmental funds and 12 proprietary funds. Governmental funds includethe general fund, street repair millage fund, and other special revenue, capital projects and debt service funds.

At the close of the current fiscal year, the City’s governmental funds reported combined ending fund balances of$93,713,183, increasing $7,498,707 during the fiscal year.Of the above fund balance amount, $15,330,765 is unassigned and may be used to meet the government’s ongoingobligations to citizens and creditors, $15,018,201 is assigned, $4,584,590 is committed and may be used subject to thepurpose of the fund in which it is located, and the remaining amount of $58,779,627 is restricted by externalrestrictions (such as state gas and weight tax, grants or millage funds) or nonspendable (as in the corpus of a trust).

The government-wide statements are designed to provide readers with an overview of the City’s financial health as a whole,similar to those used in private-sector companies. The two components of the government-wide statements include:

This annual report consists of a series of financial statements: 1) management discussion and analysis (this section), 2)government-wide financial statements, 3) fund financial statements, and 4) notes to the financial statements.

Government-wide Statements

The statement of net position is the difference between assets, deferred outflows of resources, liabilities and deferredinflows of resources, which can be used as an indicator of the City’s financial health or position.

16



Most of the City’s basic services are reported in the governmental funds, which focus on how cash flows in and out of thosefunds and its balances at year-end that are available for spending/reserve purposes. The governmental funds provide adetailed short-term view of the City’s general operations and the basic services it provides. In addition, it assists managementin the assessment of whether there are more or fewer resources, which can be spent on future City programs.

Because the focus of governmental funds is narrower than that of governmental-wide financial statements, it is useful tocompare the information presented for governmental funds with similar information presented for governmental activities inthe government-wide financial statements. By doing so, readers may better understand the long-term impact of thegovernment’s near-term financing decisions. Both the governmental fund balance sheet and the governmental fund statementof revenues, expenditures, and changes in fund balances provide a reconciliation to facilitate this comparison betweengovernmental funds and governmental activities.

The City maintains 31 individual governmental funds. Information is presented separately in the governmental fund balancesheet and in the governmental fund statement of revenues, expenditures, and changes in fund balances for the general andthe street repair millage special revenue funds. Data from the other 29 governmental funds are combined in a single,aggregated presentation. Individual fund data for each of these nonmajor governmental funds is provided in the form ofcombining statements elsewhere in this report.

Governmental funds

The statement of activities provides information about the City activities as a whole, as it relates to the City’s revenuesand expenses. The statement of activities accounts for revenues and expenses when they occur, regardless of when cash isreceived or paid. This statement indicates whether the City’s revenues exceed its expenses, which is another way tomonitor the overall health of the City.

Governmental activities - All of the City’s basic services such as police, fire, public works, and general administration areincluded in the governmental activities. Property taxes, fees and charges, state shared revenues, and state and federalgrants finance most of these activities.

Business-type activities - Business-type activity areas include water, sewer and stormwater systems, parking facilities, solidwaste and an airport. The City primarily utilizes fees and charges to cover the cost of services provided in these business-type activities with the exception of the solid waste activity that is supplemented by property taxes.

Component units - Included in the component units for the City are the Downtown Development Authority, the SmartZoneLocal Development Finance Authority and the Ann Arbor Housing Commission. Although the component units are separatelegal entities, the City is financially responsible for them. The Housing Commission provides low-income housing to Cityresidents. The City provides limited, special purpose financial support to the Commission and is contingently liable for itsdebt.

The fund financial statements provide detailed information about the City’s most significant funds, not the City as a whole.The City uses the fund financial statements to account for specific funding sources and its spending patterns. Some funds arerequired to be established by State law and by bond covenants. The City Council establishes other funds to control andmanage funds for particular purposes or to show it complies with legal requirements. The fund financial statements aredivided into three categories: governmental funds, proprietary funds, and fiduciary funds.

Fund Financial Statements

The statement of net position and the statement of activities, contain information in the following three categories:

17



Fiduciary funds

Financial Analysis of the City as a Whole

Other information

Proprietary funds

The City maintains 12 different proprietary funds. Enterprise funds are used to report the same functions presented asbusiness-type activities in the government-wide financial statements. The City uses enterprise funds to account for its water,stormwater and sanitary sewer operations. Internal service funds are an accounting device used to accumulate and allocatecosts internally among the City’s various functions. The City uses internal service funds to account for its central stores, fleetservices, information technology, project management, insurance funds and Wheeler Center Maintenance Facility operations.Because internal service funds benefit predominantly governmental rather than business-type functions, they have beenincluded within governmental activities in the government-wide financial statements.

Fiduciary funds are used to account for resources held for the benefit of parties outside the government. The City is thetrustee, or fiduciary, for certain assets held on behalf of others. Fiduciary funds are not reflected in the government-widefinancial statements because the resources of those funds are not available to support the City’s own programs. Theaccounting used for fiduciary funds is much like that used for proprietary funds. Fiduciary funds combining statementinformation is contained in the combining section of the CAFR.

Additional Information

Proprietary funds provide the same type of information as the government-wide financial statements, only in more detail.The proprietary fund financial statements provide separate information for the water, sanitary sewer operations, parkingsystem, airport, stormwater system, and solid waste, each of which are considered major funds of the City.

In addition to the basic financial statements and accompanying notes, this report also presents certain required supplementaryinformation. This includes the management's discussion and analysis and the schedules concerning the City’s progress infunding its obligation to provide pension and retiree health care benefits to its employees.

The government-wide financial analysis focuses on the net position and changes in net position of the City’s governmental andbusiness-type activities. As noted earlier, net position may serve over time as a useful indicator of a government’s financialposition. As the following table demonstrates, the City’s assets and deferred outflows of resources exceeded its liabilities anddeferred inflows of resources by $1,052,999,402 at June 30, 2016 compared to $1,042,825,502 at June 30, 2015.

The combining and individual fund financial statements and schedules, referred to earlier in connection with nonmajorgovernmental funds and internal service funds, are presented immediately following the required supplementary information.

The notes provide additional information that is essential to a full understanding of the data provided in the government-wideand fund financial statements.

Notes to the financial statements

18



Net Position

Governmental Activities Business-type Activities Total

2016 2015 2016 2015 2016 2015

Current and other assets 140,680,590$ 137,687,008$ 134,893,465$ 123,019,270$ 275,574,055$ 260,706,278$

Capital assets, net 807,547,164 812,887,948 398,801,228 379,278,941 1,206,348,392 1,192,166,889

Total assets 948,227,754 950,574,956 533,694,693 502,298,211 1,481,922,447 1,452,873,167

Deferred outflows of resources 14,594,638 7,466,626 19,978,540 3,153,646 34,573,178 10,620,272

Long-term liabilities 124,800,821 129,278,591 205,170,956 188,152,930 329,971,777 317,431,521

Pension and OPEB 61,960,165 57,262,334 26,303,002 11,697,413 88,263,167 68,959,747

Other liabilities 20,232,459 15,790,015 22,448,169 18,486,654 42,680,628 34,276,669

Total liabilities 206,993,445 202,330,940 253,922,127 218,336,997 460,915,572 420,667,937

Deferred inflowsof resources 1,804,122 - 776,529 - 2,580,651 -

Net positionNet investment in

capital assets 696,101,749 697,791,106 198,917,535 193,410,202 895,019,284 891,201,308

Restricted 57,396,250 56,287,227 33,715,280 32,368,111 91,111,530 88,655,338

Unrestricted 526,826 1,632,309 66,341,762 61,336,547 66,868,588 62,968,856

Total net position 754,024,825$ 755,710,642$ 298,974,577$ 287,114,860$ 1,052,999,402$ 1,042,825,502$

Long-term liabilities have increased from 2015 to 2016 due to the increase in revolving debt related to the wastewatertreatment plant reconstruction and various storm water projects. Pension and OPEB liabilities have increased due to theincrease in pension liability primarily related to the valuation of plan assets at June 30, 2016, compared to June 30, 2015.Other liabilities have increased from 2015 to 2016 primarily due to an increase in deposits in governmental activities relatedto new construction and an increase in estimated claims payable related to the City’s closed landfill in business-typeactivities.

By far the largest portion of the City’s net position reflects its investment in capital assets (i.e., land, buildings, vehicles,equipment and infrastructure), less any related debt used to acquire those assets that is still outstanding. The City uses thesecapital assets to provide services to citizens; consequently, these assets are not available for future spending. Although theCity’s investment in its capital assets is reported net of related debt, it should be noted that the resources needed to repaythis debt must be provided from other sources, since the capital assets themselves cannot be used to liquidate theseliabilities.

An additional portion of the City’s net position at June 30, 2016 ($91,111,530) represents resources that are subject toexternal restrictions on how they may be used. The remaining balance of unrestricted net position of $66,868,588 may beused to meet the government’s ongoing obligations to citizens and creditors, subject to the restrictions of the fund.

At the end of the current fiscal year, the City is able to report positive balances in all three categories of net position, bothfor the government as a whole, as well as for its separate governmental and business-type activities.

19



Change in Net Position


2016 2015 2016 2015 2016 2015Revenues

Program revenues:Charges for services 31,384,738$ 29,192,461$ 61,517,542$ 57,763,670$ 92,902,280$ 86,956,131$

Operating grants 12,273,077 11,030,886 - - 12,273,077 11,030,886

Capital grants 638,182 865,776 600,945 4,645,758 1,239,127 5,511,534

General revenues:Property taxes 71,544,363 69,605,519 12,072,979 11,728,679 83,617,342 81,334,198

State shared revenues and grants 10,215,633 10,317,088 - - 10,215,633 10,317,088

Investment income 1,558,594 1,262,302 1,774,736 1,293,959 3,333,330 2,556,261

Other 320,426 150,905 59,650 67,250 380,076 218,155

Total revenues 127,935,013 122,424,937 76,025,852 75,499,316 203,960,865 197,924,253

ExpensesGovernmental activities:

General government 15,951,143 16,550,948 - - 15,951,143 16,550,948

Public safety 45,158,518 43,882,972 - - 45,158,518 43,882,972

Public works 38,305,144 33,619,237 - - 38,305,144 33,619,237

Community and economic -

development 2,925,711 2,749,048 - - 2,925,711 2,749,048

Culture and recreation 12,865,261 13,374,937 - - 12,865,261 13,374,937

Public transportation 10,038,406 9,735,605 - - 10,038,406 9,735,605

Interest on debt 4,837,529 4,691,976 - - 4,837,529 4,691,976

Business-type activities:Water - - 19,188,325 18,494,776 19,188,325 18,494,776

Sewer - - 17,880,966 16,842,294 17,880,966 16,842,294

Parking - - 2,048,444 2,144,727 2,048,444 2,144,727

Airport - - 670,167 746,680 670,167 746,680

Stormwater - - 5,616,057 5,986,171 5,616,057 5,986,171

Solid waste - - 18,301,294 12,986,803 18,301,294 12,986,803

Total expenses 130,081,712 124,604,723 63,705,253 57,201,451 193,786,965 181,806,174

Change in net positionbefore transfers (2,146,699) (2,179,786) 12,320,599 18,297,865 10,173,900 16,118,079

Transfers 460,882 4,831,153 (460,882) (4,831,153) - -

Change in net position (1,685,817) 2,651,367 11,859,717 13,466,712 10,173,900 16,118,079

Net position:Beginning of year:

Previously stated 755,710,642 799,167,887 287,114,860 282,161,148 1,042,825,502 1,081,329,035

Restatement forimplementation of GASB 68 - (46,108,612) - (8,513,000) - (54,621,612)

End of year 754,024,825$ 755,710,642$ 298,974,577$ 287,114,860$ 1,052,999,402$ 1,042,825,502$

The City’s net position increased by $10,173,900 during the current fiscal year and $16,118,079 in the prior fiscal year.

20



Public safety expenses increased $1.3 million due to increased personnel expenses for the pension liability accrual for GASBStatement Number 68, Accounting and Financial Reporting for Pensions.

Public works expenses increased by $4.7 million due to an increase in depreciation expense for street infrastructure.

Expenses for culture and recreation decreased $0.5 million due to decreased expenses in the open space millage fund.

Expenses for governmental activities increased $5,476,989 from 2015 to 2016. Key elements are as follows:

Property taxes increased 2.8% during fiscal year 2016 and 2.5% in fiscal year 2015.

Investment income increased 23% due to an increase in the size of the investment portfolio. Last year, investment incomedecreased 22%. This is attributable to fluctuations in the market value of the investments. It is important to note that theCity holds all of its investments until they mature and do not experience a realized loss on investments.

Governmental activities decreased the City’s net position by $1,685,817. During fiscal year 2015, governmental activitiesincreased by $2,651,367, which was a 16% increase of the total growth for fiscal year 2015. Key elements are as follows:

Charges for services increased 7.5% compared to a increase of 8% in fiscal year 2015 primarily due to an increase in revenuefrom the parks and recreation activities.

Capital contributions and grants decreased 26% due to decreased capital grant activity as compared to an decrease of 11%in fiscal year 2015. Grant activity is cyclical and this change is expected.

23.85%

9.01%

0.71%

56.86%

8.43% 1.03%0.12%

2015 Governmental Activities ‐Revenues by Source

Charges for servicesOperating contributions and grantsCapital contributions and grantsProperty taxesState shared revenues and grantsInvestment incomeOther

24.53%

9.59%

0.50%55.92%

7.99%

1.22%0.25%

2016 Governmental Activities ‐Revenues by Source

Charges for servicesOperating contributions and grantsCapital contributions and grantsProperty taxesState shared revenues and grantsInvestment incomeOther

21



Water expenses have increased $0.7 million due to an increase in the pension liability accrual for GASB StatementNumber 68, Accounting and Financial Reporting for Pensions, as well as an increase in depreciation.Sewer expenses have increased $1.0 million primarily due to an increase in the pension liability accrual for GASBStatement Number 68, Accounting and Financial Reporting for Pensions, as well as an increase in the liability foraccrued compensated absences.

Business-type activities increased the City’s net position by $11,859,717 for fiscal year 2016 and by $13,466,712 for fiscal year2015, accounting for 100% and 84% of the total growth in the government’s net position for the current year and prior year,respectively. Key elements of this increase are as follows:

Revenues were relatively flat overall in fiscal year 2016 due to decreased capital contributions in water funds fromdecreased intergovernmental participation to pay for funding an expanded water system offset with increased charges forservices. In the prior year, there was an overall increase of 3%.

Expenses increased $6,503,802, or 10%, in fiscal year 2016 compared to an increase of $4,209,379 or 8%, in fiscal year 2015,primarily due to the following:

Solid Waste expenses have increased $5.3 million primarily due to an increase in the contingent liability for landfillcleanup.

13.28%

35.22%

26.98%

2.21%

10.73%

7.81%3.77%

2015 Governmental Activities ‐Expenses by Function

General governmentPublic safetyPublic worksCommunity and economic developmentCulture and recreationPublic transportationDebt service

12.26%

34.72%

29.45%

2.25%9.89%

7.72%3.72%

2016 Governmental Activities ‐Expenses by Function

General government

Public safety

Public works

Community and economic development

Culture and recreation

Public transportation

Debt service

76,025,852 75,499,316

63,705,253 57,201,451

‐

10,000,000

20,000,000

30,000,000

40,000,000

50,000,000

60,000,000

70,000,000

80,000,000

2016 2015

Revenues and Expenses Business‐type Activities

2016 and 2015

Revenues

Expenses

22



Financial Analysis of the Government’s Funds

General Fund Budgetary Highlights

Capital Asset and Debt Administration

As noted earlier, the City uses fund accounting to ensure and demonstrate compliance with finance-related legalrequirements.

Governmental funds. The focus of the City’s governmental funds is to provide information on near-term inflows, outflows,and balances of spendable resources. Such information is useful in assessing the City’s financing requirements. In particular,unassigned fund balance may serve as a useful measure of the government’s net resources available for spending at the end ofthe fiscal year.

At the end of the current fiscal year, the City’s governmental funds reported combined ending fund balances of $93,713,183 at June 30, 2016 versus $86,214,476 at June 30, 2015, an increase of $7,498,707. Of the total fund balance amount, $15,330,765at June 30, 2016 is unassigned, indicating this money is available for spending at the government’s discretion. At June 30,2015, $17,235,156 was unassigned.

The general fund is the chief operating fund of the City. At the end of the current fiscal year, unassigned fund balance of thegeneral fund was $15,330,765 at June 30, 2016. At June 30, 2015, the unassigned fund balance was $17,235,156. Total fundbalance was $25,135,349 and $22,483,300 at June 30, 2016 and 2015, respectively. As a measure of the general fund’sliquidity, it may be useful to compare unassigned fund balance to total fund expenditures. Unassigned fund balancerepresents 19.04% at June 30, 2016 of total general fund expenditures. Unassigned fund balance was 18.23% at June 30, 2015of total general fund expenditures. The fund balance of the City’s general fund increased by $2,652,049 during the currentfiscal year in comparison to an decrease of $95,908 during the prior fiscal year. For fiscal year 2016, this is primarilyattributable to departmental expenditures coming in under budget.

Proprietary funds. The City’s proprietary funds provide the same type of information found in the government-wide financialstatements for business-type activities, but in more detail.

The street repair millage fund balance decreased by $1,800,684 in fiscal year 2016 compared to a decrease of $954,206 infiscal year 2015. This decrease is attributable to planned use of fund balance for construction projects.

Unrestricted net position of the water, sanitary, stormwater sewer, parking system, solid waste and airport at the end of theyear amounted to $65,009,898. Water, sanitary, parking, airport and stormwater sewer had an increase in net position for theyear totaling $13,613,321. The solid waste fund, had a decrease in net position of $3,085,468 due to the increased contingentliability expenses. Other factors concerning the finances of these funds have been addressed in the discussion of the City’sbusiness-type activities.

Differences between the original and final budgets for expenditures resulted in a 2.3% increase in fiscal year 2016 comparedto a 1.5% increase in fiscal year 2015. The general fund revenues and other financing sources exceeded expenditures andother financing uses by $2,652,049.

Capital assets. The City’s investment in capital assets for its governmental/business-type activities as of June 30, 2016 was$1,206,348,392 compared to $1,192,166,889 at June 30, 2015 (net of accumulated depreciation). This investment in capitalassets includes land, construction in progress, buildings, improvements, machinery and equipment, vehicles, drainbenefit,intangible assets and infrastructure. The total increase in the City’s investment in capital assets for the current fiscalyear was 1.19% compared to 2.35% in fiscal year 2015. Major capital asset events during the fiscal year 2016 included anincrease in buildings ($47,834,170) capitalized from construction in progress, and an increase in infrastructure ($20,662,602)for road and other improvements. Additional information on the City’s capital assets can be located in note 7 of the notes tothe financial statements.

23



Capital Assets (net of depreciation)


2016 2015 2016 2015 2016 2015

Land $ 59,869,749 $ 59,835,599 $ 7,291,349 $ 7,291,349 $ 67,161,098 $ 67,126,948

Construction in progress 2,991,316 3,413,194 132,685,515 163,592,379 135,676,831 167,005,573

Buildings 141,309,343 146,080,326 119,569,152 71,427,731 260,878,495 217,508,057

Improvements other than buildings 14,155,753 12,192,174 130,409,726 127,168,655 144,565,479 139,360,829

Machinery and equipment 2,659,350 2,776,771 4,695,164 5,597,154 7,354,514 8,373,925

Vehicles 6,324,381 5,851,631 671,152 539,389 6,995,533 6,391,020

Drain benefit - - 3,479,170 3,662,284 3,479,170 3,662,284

Intangible assets - 234,717 - - - 234,717

Infrastructure 580,237,272 582,503,536 - - 580,237,272 582,503,536

Total capital assets, net $ 807,547,164 $ 812,887,948 $ 398,801,228 $ 379,278,941 $ 1,206,348,392 $ 1,192,166,889

Long-term Debt


2016 2015 2016 2015 2016 2015

General obligation bonds 111,532,000$ 115,775,000$ 9,855,000$ 12,140,000$ 121,387,000$ 127,915,000$

Special assessment bonds 15,000 35,000 - - 15,000 35,000

Revenue bonds - - 62,770,000 65,755,000 62,770,000 65,755,000

Revolving loans - - 114,299,561 93,440,278 114,299,561 93,440,278

Drain notes - - 14,721,632 13,827,347 14,721,632 13,827,347

Capital leases - - 63,459 105,764 63,459 105,764

Deferred amounts:For issuance premiums 605,087 195,042 1,215,561 879,012 1,820,648 1,074,054

For issuance discounts (218,264) (345,712) (13,688) (96,690) (231,952) (442,402)

Compensated absences 12,866,998 13,619,261 2,259,431 2,102,219 15,126,429 15,721,480

Total long-term debt 124,800,821$ 129,278,591$ 205,170,956$ 188,152,930$ 329,971,777$ 317,431,521$

The following factors were considered in preparing the City’s budget for fiscal year 2017:

Pension contributions are projected to increase 5.56% in fiscal year 2017.

The City’s total debt increased by $12,540,256 or 4% during the fiscal year, primarily due to an increase in other long-termdebt representing revolving lines of credit with the State of Michigan used to finance water, sewer and stormwaterinfrastructure. A summary of the City's outstanding debt can be found in note 12 of the notes to the financial statements.

State statutes limit the amount of the general obligation debt a governmental entity may issue to 10 percent of its totalassessed valuation. The current debt limitation for the City is $611,857,370, which is significantly in excess of the City’soutstanding general obligation debt.

Economic Factors and Next Year’s Budgets and Rates

Property tax revenues are budgeted to increase 2.03% in fiscal year 2017.Average salary costs were budgeted to increase 3.00% in fiscal year 2017.Healthcare costs were projected to increase 6.34% in fiscal year 2017.

Long-term debt. At the end of the current fiscal year, the City had total bonded debt outstanding of $184,172,000. Of thatamount, $121,402,000 comprises debt backed by the full faith and credit of the City. The remainder of the City’s debtrepresents bonds secured solely by specified revenue sources (i.e., revenue bonds).

24



Contacting the City’s Financial Management

This financial report is designed to provide a general overview of the City’s finances for all those with an interest in thegovernment’s finances. Questions concerning any of the information provided in this report, requests for additional financialinformation or complete financial statements of the individual component units should be addressed to the City of Ann ArborFinancial and Administrative Services-Accounting Services, 301 East Huron Street, P.O. Box 8647, Ann Arbor, Michigan 48107-8647.

25


26

BASIC FINANCIAL STATEMENTS

27

GOVERNMENT-WIDE FINANCIAL STATEMENTS

28


Statement of Net PositionJune 30, 2016

Governmental Business-type ComponentActivities Activities Total Units

AssetsCash 71,186$ 14,101,469$ 14,172,655$ 1,555,716$ Equity in pooled cash and investments 128,068,629 93,249,080 221,317,709 1,624,540 Investments, at fair value 2,093,259 - 2,093,259 14,986,881 Receivables 7,525,469 22,710,285 30,235,754 1,956,283 Internal balances (670,228) 670,228 - - Other assets 3,592,275 4,162,403 7,754,678 73,572 Capital assets not being depreciated 62,861,065 139,976,864 202,837,929 343,627 Capital assets being depreciated, net 744,686,099 258,824,364 1,003,510,463 519,187

Total assets 948,227,754 533,694,693 1,481,922,447 21,059,806

Deferred outflows of resourcesDeferred charge on refunding 488,408 3,027,832 3,516,240 - Deferred pension amounts 14,106,230 16,950,708 31,056,938 43,748

Total deferred outflows of resources 14,594,638 19,978,540 34,573,178 43,748

LiabilitiesAccounts payable and accrued liabilities 19,468,393 20,943,324 40,411,717 2,797,534 Accrued interest payable 764,066 1,504,845 2,268,911 231,149 Unearned revenue - - - 1,041,464 Long-term liabilities:

Due within one year 9,920,714 12,603,401 22,524,115 325,023 Due in more than one year 114,880,107 192,567,555 307,447,662 210,138

Other noncurrent liabilities:Net other postemployment benefits 849,988 - 849,988 - Net pension liability 61,110,177 26,303,002 87,413,179 122,402

Total liabilities 206,993,445 253,922,127 460,915,572 4,727,710

Deferred inflows of resourcesDeferred pension amounts 1,804,122 776,529 2,580,651 3,614

Net position Net investment in capital assets 696,101,749 198,917,535 895,019,284 862,814 Restricted for:

Debt service 323,174 13,919,996 14,243,170 - Equipment replacement - 19,614,293 19,614,293 - Endowment (non-expendable) 1,984,000 - 1,984,000 - Highway and streets 33,645,953 - 33,645,953 - Culture and recreation 15,933,178 - 15,933,178 - Other purposes 5,509,945 - 5,509,945 273,106 Landfill - 180,991 180,991 -

Unrestricted 526,826 66,341,762 66,868,588 15,236,310

Total net position 754,024,825$ 298,974,577$ 1,052,999,402$ 16,372,230$

The accompanying notes are an integral part of the financial statements.

Primary Government

29


Statement of ActivitiesFor the Year Ended June 30, 2016

Program Revenues

Operating Capital NetCharges Grants and Grants and (Expense)

Functions / Programs Expenses for Services Contributions Contributions Revenue

Primary governmentGovernmental activities:

General government 15,951,143$ 8,691,577$ 802,537$ -$ (6,457,029)$ Public safety 45,158,518 9,026,629 1,093,691 403,162 (34,635,036) Public works 38,305,144 4,262,035 10,221,080 - (23,822,029) Community/economic development 2,925,711 - 5,686 - (2,920,025) Culture and recreation 12,865,261 5,121,351 150,083 235,020 (7,358,807) Public transportation 10,038,406 - - - (10,038,406) Interest on long-term debt 4,837,529 4,283,146 - - (554,383)

Total governmental activities 130,081,712 31,384,738 12,273,077 638,182 (85,785,715)

Business-type activities:Water 19,188,325 24,053,723 - 8,141 4,873,539 Sewer 17,880,966 23,926,479 - 9,503 6,055,016 Parking 2,048,444 2,732,541 - - 684,097 Airport 670,167 924,141 - 20,400 274,374 Stormwater 5,616,057 6,915,370 - 562,901 1,862,214 Solid waste 18,301,294 2,965,288 - - (15,336,006)

Total business-type activities 63,705,253 61,517,542 - 600,945 (1,586,766)

Total primary government 193,786,965$ 92,902,280$ 12,273,077$ 1,239,127$ (87,372,481)$

Component unitsHousing Commission 19,178,577$ 176,749$ 18,319,564$ 23,145$ (659,119)$ SmartZone LDFA 2,466,473 - - - (2,466,473) Downtown Development Authority 24,482,818 21,706,096 - - (2,776,722)

Total component units 46,127,868$ 21,882,845$ 18,319,564$ 23,145$ (5,902,314)$

continued...

30


Statement of Activities

Primary Government

Governmental Business-type ComponentActivities Activities Total Units

Changes in net positionNet expense (85,785,715)$ (1,586,766)$ (87,372,481)$ (5,902,314)$

General revenues:Property taxes 71,544,363 12,072,979 83,617,342 7,901,670 State shared revenues and grants (unrestricted) 10,215,633 - 10,215,633 - Unrestricted investment earnings 1,558,594 1,774,736 3,333,330 200,893 Other 320,426 59,650 380,076 -

Transfers - internal activities 460,882 (460,882) - -

Total general revenues and transfers 84,099,898 13,446,483 97,546,381 8,102,563

Change in net position (1,685,817) 11,859,717 10,173,900 2,200,249

Net position, beginning of year 755,710,642 287,114,860 1,042,825,502 14,171,981

Net position, end of year 754,024,825$ 298,974,577$ 1,052,999,402$ 16,372,230$

concluded.


For the Year Ended June 30, 2016

31


32

FUND FINANCIAL STATEMENTS

33


Balance SheetGovernmental FundsJune 30, 2016

Nonmajor Total General Street Repair Governmental Governmental

Fund Millage Fund Funds FundsAssets

Cash 14,838$ -$ 56,148$ 70,986$ Equity in pooled cash and investments 27,887,224 18,669,512 52,535,200 99,091,936 Investments, at fair value - - 2,093,259 2,093,259 Receivables:

Taxes 119,526 2,791 20,915 143,232 Accounts 1,084,124 30,912 679,010 1,794,046 Special assessments 1,367 62,041 486,081 549,489 Accrued interest and dividends - - 6,424 6,424 Improvement charges - 1,637 - 1,637 Loans - - 19,078 19,078

Due from other funds 82,228 - - 82,228 Due from other governments 1,540,194 1,009,252 2,439,659 4,989,105 Advances to other funds 584,586 - - 584,586 Inventories, at cost 34,725 - - 34,725

Total assets 31,348,812$ 19,776,145$ 58,335,774$ 109,460,731$

LiabilitiesAccounts payable 1,466,639$ 5,813,837$ 1,169,675$ 8,450,151$ Accrued liabilities 3,105,229 99,731 386,149 3,591,109 Due to other funds - - 5,178 5,178 Due to other governments 509,267 - - 509,267 Deposits payable 1,130,915 - 1,025,460 2,156,375

Total liabilities 6,212,050 5,913,568 2,586,462 14,712,080

Deferred inflows of resourcesUnavailable revenue 1,413 597,617 436,438 1,035,468

Fund balancesNonspendable 619,311 - 1,984,000 2,603,311 Restricted - 13,264,960 42,911,356 56,176,316 Committed - - 4,584,590 4,584,590 Assigned 9,185,273 - 5,832,928 15,018,201 Unassigned 15,330,765 - - 15,330,765

Total fund balances 25,135,349 13,264,960 55,312,874 93,713,183

Total liabilities, deferred inflows of resources and fund balances 31,348,812$ 19,776,145$ 58,335,774$ 109,460,731$


34


Reconciliation Fund Balances for Governmental Funds to Net Position of Governmental Activities June 30, 2016

Fund balances of governmental funds 93,713,183$

Amounts reported for governmental activities in the statement of net position aredifferent because:

Capital assets used in governmental activities are not financial resources and therefore are not reported in the funds.

Capital assets not being depreciated 62,861,065 Capital assets being depreciated, net 744,686,099 Less capital assets accounted for in internal service funds (7,650,037)

Long-term debt and compensated absences are not due and payable in the currentperiod and therefore have not been included in the governmental funds including:

Bonds payable (111,547,000) Compensated absences (12,866,998) Unamortized bond discounts/premiums (386,823) Unamortized deferred loss on refunding 488,408 Net other postemployment benefit obligation (849,988)

Certain pension-related amounts, such as the net pension liability and deferred amountsare not due and payable in the current period or do not represent current financialresources and therefore are not reported in the funds.

Net pension liability (61,110,177) Deferred outflows related to the net pension liability 14,106,230 Deferred inflows related to the net pension liability (1,804,122)

Accrued interest payable for the current portion of interest due onbonds has not been reported in the governmental funds. (764,066)

Deferred inflows of resources in governmental funds is susceptible to full accrual on theentity-wide statements. 1,035,468

Internal service funds are used by management to charge the costs of certainactivities, such as equipment management and self-insurance, to individual funds.

Net position of governmental activities accounted for in internal service funds:Total internal service fund net position 35,445,447 Internal service fund net position accounted for in business-type activities (1,331,864)

Net position of governmental activities 754,024,825$


35


Statement of Revenues, Expenditures and Changes in Fund BalancesGovernmental FundsFor the Year Ended June 30, 2016

Nonmajor Total General Street Repair Governmental Governmental

Fund Millage Fund Funds FundsRevenues

Taxes 53,396,465$ 10,423,035$ 7,724,863$ 71,544,363$ Licenses, permits and registrations 1,454,769 - 5,917,071 7,371,840 Federal grants - - 890,919 890,919 State shared revenues and grants 11,514,655 - 10,343,604 21,858,259 Charges for services 10,020,885 - 5,494,951 15,515,836 Fines and forfeits 4,303,565 - 292,979 4,596,544 Investment income 398,907 205,525 586,383 1,190,815 Rentals 634,819 - - 634,819 Contributions and donations 1,000 - 333,247 334,247 Intergovernmental revenue - 2,372,098 255,807 2,627,905 Other revenues 383,060 - 211,410 594,470

Total revenues 82,108,125 13,000,658 32,051,234 127,160,017

ExpendituresCurrent:

General government 11,783,949 - 2,473,248 14,257,197 Public safety 43,629,994 - 3,559,463 47,189,457 Public works 4,355,383 5,629,461 8,878,384 18,863,228 Community and economic development 3,003,208 - 3,999 3,007,207 Culture and recreation 7,642,490 - 4,429,953 12,072,443 Public transportation 10,038,406 - - 10,038,406

Capital outlay 74,109 15,171,710 2,797,842 18,043,661 Debt service:

Principal retirement - - 4,148,000 4,148,000 Interest and fiscal charges - - 4,080,504 4,080,504

Total expenditures 80,527,539 20,801,171 30,371,393 131,700,103

Revenues over (under) expenditures 1,580,586 (7,800,513) 1,679,841 (4,540,086)

Other financing sources (uses)Transfers in 4,612,179 6,891,234 10,299,717 21,803,130 Transfers out (3,557,066) (891,405) (5,018,807) (9,467,278) Sale of property and equipment 16,350 - - 16,350 Issuance of debt - - 17,710,000 17,710,000 Payment to escrow agent - - (18,439,571) (18,439,571) Bond premium - - 416,162 416,162

Total other financing sources (uses) 1,071,463 5,999,829 4,967,501 12,038,793

Net change in fund balances 2,652,049 (1,800,684) 6,647,342 7,498,707

Fund balances, beginning of year 22,483,300 15,065,644 48,665,532 86,214,476

Fund balances, end of year 25,135,349$ 13,264,960$ 55,312,874$ 93,713,183$


36

ReconciliationNet Changes in Fund Balances of Governmental Fundsto Change in Net Position of Governmental ActivitiesFor the Year Ended June 30, 2016

Net change in fund balances - total governmental funds 7,498,707$

Amounts reported for governmental activities in the statement of activities differsfrom the amounts reported in the statement of revenue, expenditures,and changes in fund balances because:

Governmental funds report capital outlays as expenditures. However, in the statement of activities, the costs of those assets is allocated over their estimated useful lives as depreciation expense.

Capital outlay 28,473,786 Depreciation expense (33,388,850) Loss on disposal of capital assets (677,999)

Bond proceeds provide current financial resources to governmental funds, butissuing debt increases long-term liabilities in the statement of net position.Repayment of bond principal is an expenditure in the governmental funds, butthe repayment reduces long-term liabilities in the statement of net position.

Principal payments on long-term liabilities 4,148,000 Proceeds from bond issuance (17,710,000) Payment to escrow agent 18,439,571 Bond premium (416,162)

Accrued interest is recognized on the government-wide financial statements. 52,957

Amortization of bond premium, discount and deferred loss on refunding is an expenseon statement of activities. (809,982)

Certain expenses reported in the statement of activities do not require the use ofcurrent financial resources and therefore are not reported as fund expendituresincluding the changes in accruals for:

Compensated absences 752,263 Other postemployment benefits liability 3,959,948 Net pension liability and related deferred amounts (3,259,809)

Deferred inflow of resources in governmental funds is susceptible to full accrual on thegovernment-wide statements. (149,839)

Internal service funds are used by management to charge the costs of certainactivities, such as equipment management and self-insurance, to individual funds.

Total change in net position of the internal service funds (7,266,544) Internal service fund change in net position accounted for in business-type activities (1,331,864)

Change in net position of governmental activities (1,685,817)$



37


Statement of Revenues, Expenditures and Changes in Fund BalancesBudget and Actual - General FundFor the Year Ended June 30, 2016

Actual OverOriginal Final (Under) FinalBudget Budget Actual Budget

RevenuesTaxes 53,288,065$ 53,288,065$ 53,396,465$ 108,400$ Licenses, permits and registrations 2,055,000 2,055,000 1,454,769 (600,231) State shared revenues and grants 12,030,777 12,030,777 11,514,655 (516,122) Charges for services 8,714,733 8,814,733 10,020,885 1,206,152 Fines and forfeits 4,237,632 4,237,632 4,303,565 65,933 Investment income 387,839 387,839 398,907 11,068 Rentals 588,990 588,990 634,819 45,829 Contributions and donations 1,000 1,000 1,000 - Other revenues 194,420 269,420 383,060 113,640

Total revenues 81,498,456 81,673,456 82,108,125 434,669


General government:Mayor and Council 376,077 378,151 377,891 (260) Administration 989,246 1,105,217 973,340 (131,877) Human resources 1,866,526 1,892,668 1,864,190 (28,478) Attorney 2,025,833 2,113,809 2,083,826 (29,983) Clerk / Elections 1,117,502 1,198,223 1,132,247 (65,976) Finance 7,171,608 7,303,203 6,830,923 (472,280) Environmental coordination services 229,191 156,371 154,647 (1,724) District court 4,469,819 4,526,138 4,260,039 (266,099) Planning 1,323,082 1,298,748 1,171,199 (127,549) Other unallocated 3,294,243 1,148,719 474,777 (673,942) Municipal service charge (7,552,251) (7,521,829) (7,539,130) (17,301)

15,310,876 13,599,418 11,783,949 (1,815,469)

Public safety:Police department 25,434,073 26,312,034 26,308,883 (3,151) Fire department 14,964,957 15,808,143 15,790,369 (17,774) Building department 1,524,069 1,602,960 1,530,742 (72,218)

41,923,099 43,723,137 43,629,994 (93,143)

Public works:Public services 9,642,850 9,844,216 8,345,920 (1,498,296) Municipal service charge (5,480,996) (5,480,996) (3,990,537) 1,490,459

4,161,854 4,363,220 4,355,383 (7,837)

continued…

38


Statement of Revenues, Expenditures and Changes in Fund BalancesBudget and Actual - General FundFor the Year Ended June 30, 2016

Actual OverOriginal Final (Under) FinalBudget Budget Actual Budget

Expenditures (concluded)Current (concluded):

Community development:Community development 4,047,988$ 5,594,026$ 5,065,903$ (528,123)$ Municipal service charge (1,902,671) (2,083,093) (2,062,695) 20,398

2,145,317 3,510,933 3,003,208 (507,725)

Culture and recreation - Parks and recreation 7,852,568 7,983,102 7,642,490 (340,612)

Public transportation 10,070,668 10,070,668 10,038,406 (32,262)

Capital outlay 219,456 300,416 74,109 (226,307)

Total expenditures 81,683,838 83,550,894 80,527,539 (3,023,355)

Revenues over (under) expenditures (185,382) (1,877,438) 1,580,586 3,458,024

Other financing sources (uses)Transfers in 4,438,516 4,438,516 4,612,179 173,663 Transfers out (3,030,587) (3,557,868) (3,557,066) (802) Sale of property and equipment - - 16,350 16,350

Total other financing sources (uses) 1,407,929 880,648 1,071,463 190,815

Net change in fund balance 1,222,547 (996,790) 2,652,049 3,648,839

Fund balance, beginning of year 22,483,300 22,483,300 22,483,300 -

Fund balance, end of year 23,705,847$ 21,486,510$ 25,135,349$ 3,648,839$

concluded.


39


40


Statement of Revenues, Expenditures and Changes in Fund BalanceBudget and Actual - Street Repair Millage Special Revenue FundFor the Year Ended June 30, 2016

Actual Over Original Final (Under) Final

Budget Budget Actual BudgetRevenues

Taxes 10,408,642$ 10,408,642$ 10,423,035$ 14,393$ Charges for services - 40,567 - (40,567) Investment income 206,137 206,137 205,525 (612) Intergovernmental revenue - 111,596 2,372,098 2,260,502

Total revenues 10,614,779 10,766,942 13,000,658 2,233,716

ExpendituresCurrent - public works 13,943,850 5,042,205 5,629,461 587,256 Capital outlay - 16,311,194 15,171,710 (1,139,484)

Total expenditures 13,943,850 21,353,399 20,801,171 (552,228)

Revenues under expenditures (3,329,071) (10,586,457) (7,800,513) 2,785,944

Other financing sources (uses)Transfers in 2,851,660 7,556,940 6,891,234 (665,706) Transfers out (68,954) (892,054) (891,405) (649)

Total other financing sources (uses) 2,782,706 6,664,886 5,999,829 (665,057)

Net change in fund balance (546,365) (3,921,571) (1,800,684) 2,120,887

Fund balance, beginning of year 15,065,644 15,065,644 15,065,644 -

Fund balance - end of year 14,519,279$ 11,144,073$ 13,264,960$ 2,120,887$


41


Statement of Net PositionProprietary FundsJune 30, 2016

Water Sewage StormwaterSupply Disposal Parking SewerSystem System System Airport System

AssetsCurrent assets:

Cash 3,526,111$ 10,394,335$ -$ 30$ -$ Equity in pooled cash and investments 28,123,400 29,983,284 1,842,476 955,876 10,102,040 Receivables:

Accounts, net 4,870,181 6,738,925 - 91,800 2,126,281 Special assessments 13,540 25,148 - - - Improvement charges 16,626 25,217 - - 801 Taxes receivable 26,829 - - - -

Due from other governments 4,381,416 3,369,950 1,200 - - Prepaid items 7,724 3,298,791 - - 32,807 Inventories, at cost 729,760 93,321 - - -

Total current assets 41,695,587 53,928,971 1,843,676 1,047,706 12,261,929

Noncurrent assets:Receivables:

Special assessments 33,298 53,631 - - - Improvement charges 98,563 111,507 - - 1,138

Capital assets not depreciated 21,135,878 112,024,349 3,934,897 708,927 280,078 Capital assets being depreciated, net 86,430,737 107,128,478 32,654,403 1,384,463 19,793,665

Total noncurrent assets 107,698,476 219,317,965 36,589,300 2,093,390 20,074,881

Total assets 149,394,063 273,246,936 38,432,976 3,141,096 32,336,810

Deferred outflows of resourcesDeferred charge on refunding 1,028,152 1,724,488 275,192 - - Deferred pension amounts 6,120,811 5,883,022 - - 2,086,405

Total deferred outflows of resources 7,148,963 7,607,510 275,192 - 2,086,405

LiabilitiesCurrent liabilities:

Accounts payable 2,331,069 9,411,614 - 45,307 230,591 Accrued liabilities 296,503 229,847 - - 92,886 Due to other funds - - - 77,050 - Accrued interest payable 207,372 1,161,966 64,167 2,255 69,085 Deposits 157,069 - - - - Bonds payable, current 2,955,000 2,635,000 2,450,000 - 709,742 Estimated claims payable, current - - - - - Compensated absences, current 367,284 326,406 - - 114,557 Capital lease payable, current - - - - -

Total current liabilities 6,314,297 13,764,833 2,514,167 124,612 1,216,861

Noncurrent liabilities:Advance from other funds - - - 584,586 - Bonds payable, net 41,108,278 131,302,476 7,675,680 - 14,011,890 Estimated claims payable, net - - - - - Compensated absences, net 670,838 388,422 - - 48,164 Capital lease payable, net - - - - - Net pension liability 9,497,876 9,129,327 - - 3,237,716

Total noncurrent liabilities 51,276,992 140,820,225 7,675,680 584,586 17,297,770

Total liabilities 57,591,289 154,585,058 10,189,847 709,198 18,514,631

Deferred inflows of resourcesDeferred charge on refunding 280,400 269,520 - - 95,586

Net positionNet investment in capital assets 64,531,489 86,939,839 26,738,812 2,093,390 5,352,111 Restricted for debt service 3,525,661 10,394,335 - - - Restricted for equipment replacement 10,912,529 8,701,764 - - - Restricted for landfill - - - - - Unrestricted 19,701,658 19,963,930 1,779,509 338,508 10,460,887

Total net position 98,671,337$ 125,999,868$ 28,518,321$ 2,431,898$ 15,812,998$

continued…

Business-type Activities - Enterprise Funds

42


Statement of Net PositionProprietary FundsJune 30, 2016

GovernmentalActivities

InternalSolid ServiceWaste Total Funds


Cash 180,993$ 14,101,469$ 200$ Equity in pooled cash and investments 22,242,004 93,249,080 28,976,693 Receivables:

Accounts, net 716,749 14,543,936 22,458 Special assessments - 38,688 - Improvement charges - 42,644 - Taxes receivable 7,485 34,314 -

Due from other governments - 7,752,566 - Prepaid items - 3,339,322 2,611,707 Inventories, at cost - 823,081 945,843

Total current assets 23,147,231 133,925,100 32,556,901

Noncurrent assets:Receivables:

Special assessments - 86,929 - Improvement charges - 211,208 -

Capital assets not depreciated 1,892,735 139,976,864 150,240 Capital assets being depreciated, net 11,432,618 258,824,364 7,499,797

Total noncurrent assets 13,325,353 399,099,365 7,650,037

Total assets 36,472,584 533,024,465 40,206,938

Deferred outflows of resourcesDeferred charge on refunding - 3,027,832 - Deferred pension amounts 2,860,470 16,950,708 -

Total deferred outflows of resources 2,860,470 19,978,540 -


Accounts payable 911,506 12,930,087 1,907,379 Accrued liabilities 111,138 730,374 1,562 Due to other funds - 77,050 - Accrued interest payable - 1,504,845 - Deposits - 157,069 - Bonds payable, current - 8,749,742 - Estimated claims payable, current 245,151 245,151 1,569,930 Compensated absences, current 124,588 932,835 - Capital lease payable, current 42,305 42,305 -

Total current liabilities 1,434,688 25,369,458 3,478,871

Noncurrent liabilities:Advance from other funds - 584,586 - Bonds payable, net - 194,098,324 - Estimated claims payable, net 6,880,643 6,880,643 1,282,620 Compensated absences, net 219,172 1,326,596 - Capital lease payable, net 21,154 21,154 - Net pension liability 4,438,083 26,303,002 -

Total noncurrent liabilities 11,559,052 229,214,305 1,282,620

Total liabilities 12,993,740 254,583,763 4,761,491

Deferred inflows of resourcesDeferred charge on refunding 131,023 776,529 -

Net position Net investment in capital assets 13,261,894 198,917,535 7,650,037 Restricted for debt service - 13,919,996 - Restricted for equipment replacement - 19,614,293 - Restricted for landfill 180,991 180,991 - Unrestricted 12,765,406 65,009,898 27,795,410

Total net position 26,208,291$ 297,642,713$ 35,445,447$

concluded.



43


44


Reconciliation Net Position of Enterprise Fundsto Net Position of Business-type ActivitiesJune 30, 2016

Net position of enterprise funds 297,642,713$

Amounts reported for business-type activities in the statement of net position aredifferent because:

Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance, to individual funds. A portion of the net position of the internal service funds is allocated to the enterprise funds and reported in the statement of net position.

Net position of business-type activities accounted for in governmental-type internal service funds 1,331,864

Net position of business-type activities 298,974,577$


45


Statement of Revenues, Expenses and Changes in Fund Net PositionProprietary FundsFor the Year Ended June 30, 2016

Water Sewage StormwaterSupply Disposal Parking SewerSystem System System Airport System

Operating revenuesCharges for services 24,053,723$ 23,926,479$ 2,732,541$ 924,141$ 6,915,370$

Operating expensesPersonal services 7,395,206 6,774,904 - 283,015 2,381,739 Municipal service charge 396,012 521,436 - 28,752 208,296 Information technology charge 841,810 303,379 - 11,796 119,616 Other operating costs 6,154,468 4,831,673 83,057 255,085 2,123,880 Depreciation 3,686,594 2,300,058 1,687,836 62,433 657,248

Total operating expenses 18,474,090 14,731,450 1,770,893 641,081 5,490,779

Operating income (loss) 5,579,633 9,195,029 961,648 283,060 1,424,591

Nonoperating revenues (expenses)Interest income 285,177 1,098,577 15,844 8,871 107,169 Gain (loss) on sale of capital assets 21,650 (173,884) - 8,000 3,000 Interest and fiscal charges (917,596) (3,175,100) (277,551) (29,086) (300,736) Property taxes - - - - -

Total nonoperating revenues (expenses) (610,769) (2,250,407) (261,707) (12,215) (190,567)

Income (loss) before contributionsand transfers 4,968,864 6,944,622 699,941 270,845 1,234,024

Capital contributions 8,141 9,503 - 20,400 562,901

Transfers in 3,942,174 633,700 - 20,772 680,154

Transfers out (2,629,512) (1,300,446) - (7,884) (2,444,878)

Changes in net position 6,289,667 6,287,379 699,941 304,133 32,201

Net position, beginning of year 92,381,670 119,712,489 27,818,380 2,127,765 15,780,797

Net position, end of year 98,671,337$ 125,999,868$ 28,518,321$ 2,431,898$ 15,812,998$

continued…


46


Statement of Revenues, Expenses and Changes in Fund Net PositionProprietary FundsFor the Year Ended June 30, 2016



Operating revenuesCharges for services 2,965,288$ 61,517,542$ 46,664,312$

Operating expensesPersonal services 3,520,484 20,355,348 8,138,195 Municipal service charge 295,560 1,450,056 1,384,092 Information technology charge 225,566 1,502,167 704,025 Other operating costs 14,152,773 27,600,936 30,399,383 Depreciation 838,488 9,232,657 2,678,507

Total operating expenses 19,032,871 60,141,164 43,304,202

Operating income (loss) (16,067,583) 1,376,378 3,360,110

Nonoperating revenues (expenses)Interest income 259,098 1,774,736 367,779 Gain (loss) on sale of capital assets 5,000 (136,234) 290,724 Interest and fiscal charges - (4,700,069) - Property taxes 12,072,979 12,072,979 -

Total nonoperating revenues (expenses) 12,337,077 9,011,412 658,503

Income (loss) before contributionsand transfers (3,730,506) 10,387,790 4,018,613

Capital contributions - 600,945 589,813

Transfers in 1,086,720 6,363,520 399,972

Transfers out (441,682) (6,824,402) (12,274,942)

Changes in net position (3,085,468) 10,527,853 (7,266,544)

Net position, beginning of year 29,293,759 287,114,860 42,711,991

Net position, end of year 26,208,291$ 297,642,713$ 35,445,447$

concluded.



47


48

ReconciliationNet Changes in Net Position of Enterprise Fundsto Changes in Net Position of Business-type ActivitiesFor the Year Ended June 30, 2016

Net change in net position - total enterprise funds 10,527,853$

Amounts reported for business-type activities in the statement of activities differsfrom the amounts reported in the statement of revenues, expenses,and changes in fund net position because:

Internal service funds are used by management to charge the costs of certain activities, such as equipment management and self-insurance, to individual funds. A portion of the operating income (loss) of the internal service funds is allocated to the enterprise funds and reported in the statement of activities.

Net operating income from business-type activities accountedfor in governmental-type internal service funds 1,331,864

Change in net position of business-type activities 11,859,717$



49


Statement of Cash FlowsProprietary FundsFor the Year Ended June 30, 2016

Sewage StormwaterWater Disposal Parking SewerSystem System System Airport System

24,861,157$ 19,910,403$ 2,731,341$ 935,471$ 6,781,632$ (6,299,770) (5,237,362) (83,056) (236,421) (2,084,098) (6,861,909) (6,170,226) - (283,015) (2,198,934)

- - - - - (1,316,303) (731,772) - (46,709) (698,078)

10,383,175 7,771,043 2,648,285 369,326 1,800,522

3,942,174 633,700 - 20,772 680,154 (2,629,512) (1,300,446) - (7,884) (2,444,878)

- - - - - - - - (73,993) -

1,312,662 (666,746) - (61,105) (1,764,724)

945,279 21,457,029 - - 1,208,499 8,141 9,503 - - 562,901

(6,204,710) (22,311,474) - (48,723) (277,167) (3,521,867) (3,153,872) (2,323,294) - (474,045)

(1,257,924) (3,145,864) (347,540) (29,339) (303,017) 21,650 22,000 - 8,000 3,000

(10,009,431) (7,122,678) (2,670,834) (70,062) 720,171

285,177 1,098,577 15,844 8,871 107,169

1,971,583 1,080,196 (6,705) 247,030 863,138

29,677,928 39,297,423 1,849,181 708,876 9,238,902

31,649,511$ 40,377,619$ 1,842,476$ 955,906$ 10,102,040$

3,526,111$ 10,394,335$ -$ 30$ -$ 28,123,400 29,983,284 1,842,476 955,876 10,102,040

31,649,511$ 40,377,619$ 1,842,476$ 955,906$ 10,102,040$

continued…

Reconciliation to statement of net position

Interest and dividends on investments

Net change in cash and cash equivalents

Cash and cash equivalents, beginning of the year

Cash and cash equivalents, end of the year

capital leases and notesInterest paid on bonds, notes, and capital leasesProceeds from sale of equipment

Net cash provided by (used in) capital and relatedfinancing activities

CashEquity in pooled cash and investments

Cash and cash equivalent, end of year

Cash flows from investing activities

Cash flows from capital and related financing activitiesProceeds from sales of bonds and notesCapital contributionsAcquisition and construction of capital assets [1]Principal paid on revenue bonds, maturities,

Transfers inTransfers outProperty taxesRepayment of advance

Net cash provided by (used in) noncapital financing activities

Payments to suppliersPayments on behalf of employeesPayments received for interfund services

Net cash provided by (used in) operating activities

Cash flows from noncapital financing activities

Payments made for interfund services


Cash flow from operating activitiesReceipts from customers

50





2,939,863$ 58,159,867$ -$ (6,942,225) (20,882,932) (33,636,580) (3,176,188) (18,690,272) (8,136,635)

- - 46,691,123 (2,797,644) (5,590,506) -

(9,976,194) 12,996,157 4,917,908

1,086,720 6,363,520 399,972 (441,682) (6,824,402) (12,274,942)

12,072,979 12,072,979 - - (73,993) -

12,718,017 11,538,104 (11,874,970)

- 23,610,807 - - 580,545 -

(88,354) (28,930,428) (2,446,504) (42,307) (9,515,385) -

- (5,083,684) - 5,000 59,650 396,255

(125,661) (19,278,495) (2,050,249)

259,100 1,774,738 367,779

2,875,262 7,030,504 (8,639,532)

19,547,735 100,320,045 37,616,425

22,422,997$ 107,350,549$ 28,976,893$

180,993$ 14,101,469$ 200$ 22,242,004 93,249,080 28,976,693

22,422,997$ 107,350,549$ 28,976,893$

continued…

Payments made for interfund services

Reconciliation to statement of net positionCashEquity in pooled cash and investments


Cash flows from investing activitiesInterest and dividends on investments




capital leases and notesInterest paid on bonds, notes, and capital leasesProceeds from sale of equipment

Net cash provided by (used in) capital and relatedfinancing activities

Cash flows from capital and related financing activitiesProceeds from sales of bonds and notesCapital contributionsAcquisition and construction of capital assets [1]Principal paid on revenue bonds, maturities,

Cash flow from operating activitiesReceipts from customersPayments to suppliersPayments on behalf of employeesPayments received for interfund services

Net cash provided by (used in) operating activities

Cash flows from noncapital financing activitiesTransfers inTransfers outProperty taxesRepayment of advance

Net cash provided by (used in) noncapital financing activities


51



Sewage StormwaterWater Disposal Parking SewerSystem System System Airport System


Reconciliation of operating income (loss) to net cashprovided by (used in) operating activities

Operating income (loss) 5,579,633$ 9,195,029$ 961,648$ 283,060$ 1,424,591$ Adjustments to reconcile operating income (loss) to net

cash provided by (used in) operating activities:Depreciation and amortization 3,686,594 2,300,058 1,687,836 62,433 657,248 Changes in assets and liabilities:

Receivables (541,251) (2,117,213) - 15,102 (292,374) Allowance for uncollectible accounts 1,451 3,101 - (3,771) (1,194) Due from other governments 1,347,235 (1,901,967) (1,199) - 159,829 Prepaid items (7,724) (43,375) - - (32,807) Inventories (4,172) (5,278) - - - Accounts payable (204,262) (263,987) - 12,502 (297,576) Accrued liabilities 60,125 21,218 - - 6,822 Deposits (7,622) - - - - Estimated claims payable - - - - - Accrued compensated absences (33,478) 96,470 - - 3,273 Net pension liability 506,646 486,987 - - 172,710

Net cash provided by (used in) operating activities 10,383,175$ 7,771,043$ 2,648,285$ 369,326$ 1,800,522$

continued…

[1] This includes a non-cash transaction in the amount of $20,400 for an asset received from the Federal Aviation Administration in the airport fund.

52






Reconciliation of operating income (loss) to net cashprovided by (used in) operating activities

Operating income (loss) (16,067,583)$ 1,376,378$ 3,360,110$ Adjustments to reconcile operating income (loss) to net

cash provided by (used in) operating activities:Depreciation and amortization 838,488 9,232,657 2,678,507 Changes in assets and liabilities:

Receivables (33,401) (2,969,137) 29,271 Allowance for uncollectible accounts 7,976 7,563 (2,462) Due from other governments - (396,102) - Prepaid items - (83,906) (350,066) Inventories - (9,450) 117,554 Accounts payable 28,902 (724,421) 511,865 Accrued liabilities 16,592 104,757 1,561 Deposits - (7,622) - Estimated claims payable 4,905,142 4,905,142 (1,428,432) Accrued compensated absences 90,949 157,214 - Net pension liability 236,741 1,403,084 -

Net cash provided by (used in) operating activities (9,976,194)$ 12,996,157$ 4,917,908$

concluded.


53


Statement of Fiduciary Net PositionFiduciary FundsJune 30, 2016

Pension andEmployee Benefit Agency

Trust Funds FundsAssets

Cash -$ 91,214$ Equity in pooled cash and investments 2,956,473 301,011 Investments, at fair value:

Equities 314,880,939 - Fixed income 203,808,333 - Other 74,795,800 -

Accrued interest and dividends 759,083 - Due from broker for securities sold 237,634 - Capital assets (net of depreciation of $112,093) 373,957 -

Total assets 597,812,219 392,225$

Deferred outflows of resourcesDeferred pension amounts 416,214

LiabilitiesAccounts payable 3,048,647 -$ Accrued liabilities 127,953 - Due to broker for securities purchased 763,491 - Mortgage payable, due in one year 27,369 - Mortgage payable, due in more than one year 192,104 - Net pension liability 645,821 - Due to others - 171,049 Due to other governments - 157,793 Deposits - 63,383

Total liabilities 4,805,385 392,225$

Deferred inflows of resourcesDeferred pension amounts 19,066

Net positionNet investment in capital assets 154,484 Restricted for pensions 593,249,498

Total net position 593,403,982$


54


Statement of Changes in Fiduciary Net PositionPension and Other Employee Benefit Trust FundsFor the Year Ended June 30, 2016

AdditionsInvestment income:

From investing activities:Depreciation in fair value of investments (1,282,169)$ Interest and dividends 5,242,691

Total investment income 3,960,522 Investment management fees (1,015,620)

Net investment income from investing activities 2,944,902

From securities lending activities:Gross earnings 86,151 Borrower rebates received (paid) 15,653 Securities lending fees (30,390)

Net investment income from securities lending activities 71,414

Total net investment income 3,016,316

Contributions:Employer 28,523,423 Plan members 3,139,266

Total contributions 31,662,689

Total additions 34,679,005

DeductionsBenefits 45,091,758 Refund of contributions 963,896 Administrative expense 782,305

Total deductions 46,837,959

Change in net position (12,158,954)

Net position, beginning of year 605,562,936

Net position, end of year 593,403,982$


55


56

COMPONENT UNIT FINANCIAL STATEMENTS

57


Combining Statement of Net PositionDiscretely Presented Component UnitsJune 30, 2016

SmartZoneLocal

Development DowntownHousing Finance Development

Commission Authority Authority TotalAssets

Cash 1,221,093$ -$ 334,623$ 1,555,716$ Equity in pooled cash and investments - 1,624,540 - 1,624,540 Investments, at fair value - - 14,986,881 14,986,881 Receivables 663,067 1,040,382 252,834 1,956,283 Other assets 73,572 - - 73,572 Capital assets not being depreciated 343,627 - - 343,627 Capital assets being depreciated, net 519,187 - - 519,187

Total assets 2,820,546 2,664,922 15,574,338 21,059,806

Deferred outflows of resourcesDeferred pension amounts 43,748 - - 43,748

LiabilitiesAccounts payable and accrued liabilities 619,904 154,766 2,022,864 2,797,534 Due to other governments 186,089 - 45,060 231,149 Unearned revenue 1,082 1,040,382 - 1,041,464 Long-term liabilities:

Due within one year 37,152 - 287,871 325,023 Due in more than one year 16,727 - 193,411 210,138

Net pension liability 122,402 - - 122,402

Total liabilities 983,356 1,195,148 2,549,206 4,727,710

Deferred inflows of resourcesDeferred pension amounts 3,614 - - 3,614

Net positionNet investment in capital assets 862,814 - - 862,814 Restricted for capital projects 273,106 - - 273,106 Unrestricted 741,404 1,469,774 13,025,132 15,236,310

Total net position 1,877,324$ 1,469,774$ 13,025,132$ 16,372,230$


58


Combining Statement of ActivitiesDiscretely Presented Component UnitsFor the Year Ended June 30, 2016

SmartZoneLocal

Development DowntownHousing Finance Development

Commission Authority Authority TotalExpenses

Housing and economic development 19,178,577$ 2,466,473$ 24,482,818$ 46,127,868$

Program revenuesCharges for services 176,749 - 21,706,096 21,882,845 Operating grants and contributions 18,319,564 - - 18,319,564 Capital grants and contributions 23,145 - - 23,145

Total program revenues 18,519,458 - 21,706,096 40,225,554

Net program expense (659,119) (2,466,473) (2,776,722) (5,902,314)

General revenuesProperty taxes - 2,512,493 5,389,177 7,901,670 Unrestricted investment earnings 4,136 16,897 179,860 200,893

Total general revenues 4,136 2,529,390 5,569,037 8,102,563

Change in net position (654,983) 62,917 2,792,315 2,200,249

Net position, beginning of year 2,532,307 1,406,857 10,232,817 14,171,981

Net position, end of year 1,877,324$ 1,469,774$ 13,025,132$ 16,372,230$


59


60

NOTES TO FINANCIAL STATEMENTS

61


Notes to Financial Statements

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Downtown Development Authority (DDA). The DDA was created to finance rehabilitation andredevelopment in the downtown area. Commissioners of the DDA are appointed by the Mayor and approvedby City Council. Development plans are approved by Council and Council must approve all modifications tothe plans. The DDA’s primary source of funding is charges for services (parking) and tax incrementfinancing revenues. Bonds secured by those revenues are issued by the City on behalf of the DDA, whichdoes not have the ability to issue debt. During the fiscal year, the DDA paid $3.5 million to the City as partof an agreement between the City and DDA, wherein the DDA distributes 17% of the parking revenues to theCity. Also, during the fiscal year the DDA transferred $7.0 million for debt service payments and othertransfers for maintenance and $0.18 million as a parks grant for the Farmer's Market project. The DDAissues separate audited financial statements.

Reporting Entity

The City of Ann Arbor, Michigan (the "City") was incorporated in 1851. On April 9, 1956, a City Charter(home rule) was ratified by electors in accordance with Michigan law. The City operates under aMayor/Council - Administrator form of government and provides the following services as authorized by itscharter: public safety (police, fire, and building inspection), traffic control and street maintenance, refusecollection, water and wastewater, parks and recreation, public improvements, planning and zoning,airport, urban redevelopment and housing, golf courses, and general administrative services. Thecomponent units discussed below are included in the City’s financial reporting entity because of thesignificance of their operational or financial relationships with the City. In accordance with generallyaccepted accounting principles, these financial statements present the City (the primary government) andits component units. The criteria established by the GASB (Governmental Accounting Standards Board) fordetermining the reporting entity includes financial accountability and whether the financial statementswould be misleading if data were not included.

Blended Component Unit

The Ann Arbor Building Authority is presented as a blended component unit. Commissioners of theAuthority are appointed by the Mayor and confirmed by City Council. Although it is legally separate fromthe City, the Authority is reported as if it were part of the primary government because its sole purpose isto issue bonds to finance major capital construction by the City.

Discretely Presented Component Units

The component units column in the government-wide financial statements include the financial data of theCity's other component units. They are reported in a separate column to emphasize that they are legallyseparate from the City. The following component units are included in the reporting entity because theprimary government is financially accountable and is able to impose its will on the organizations.

62



Government-wide and Fund Financial Statements

Ann Arbor Housing Commission. The Housing Commission was created to provide low-income housing forCity residents. Commissioners of the Housing Commission are appointed by the Mayor and approved by CityCouncil. Except for the Executive Director, all employees of the Housing Commission are City employees.City Council is notified of all grant applications and any changes to contracts with the U.S. Department ofHousing and Urban Development, the Commission's primary funding source. The Commission maintains itsown accounting records and bank accounts. The City provides limited, special purpose financial support tothe Commission, subject to request and Council approval, and is contingently liable for its debt. TheHousing Commission issues separate audited financial statements.

SmartZone Local Development Finance Authority (SmartZone LDFA). The SmartZone LDFA wasestablished in accordance with the authority granted under Public Act 248 of 2000 by the cities of AnnArbor and Ypsilanti in June 2002 to encourage high-tech business investment within the boundaries of theSmartZone, comprising portions of the cities of Ann Arbor and Ypsilanti, and the funding of the SmartZonethrough a local development financing authority. The SmartZone LDFA provides financing through a taxcapture mechanism within a specific district. Presently, tax increment finance revenue is generated onlywithin the geographic boundaries of the Ann Arbor DDA. The governing body consists of a nine-memberboard of directors of which six members are appointed by the Ann Arbor City Council and three membersare appointed by the Ypsilanti City Council. The SmartZone LDFA operates under bylaws initially approvedby the Ann Arbor and Ypsilanti City Councils. The City approves the budget and maintains the accountingrecords for the SmartZone LDFA. The activities for the SmartZone LDFA are accounted for in a singlegovernmental fund.

Complete financial statements of the individual component units can be requested from the City of AnnArbor Finance Department. With respect to SmartZone LDFA, no separate financial statements arenecessary as the financial activities are contained in a single fund.

Related Organizations. The Ann Arbor Area Transportation Authority (AAATA) and the Ann Arbor EconomicDevelopment Corporation (EDC) are not included in the financial reporting entity. The members of thegoverning board of each are appointed by the Mayor and confirmed by the City Council, but the City’saccountability for these organizations does not extend beyond making these appointments. The EDC,whose purpose is to foster business development within the City and which has issued bonds bearing theCity's tax-exempt status (for which the City is not contingently liable), had assets and fund balance of$44,670 as of June 30, 2016.

The government-wide financial statements (i.e., the statement of net position and the statement ofactivities) report information on all of the nonfiduciary activities of the primary government and itscomponent units. For the most part, the effect of interfund activity has been removed from thesestatements. Governmental activities, which normally are supported by taxes and intergovernmentalrevenues, are reported separately from business-type activities, which rely to a significant extent on feesand charges for support. Likewise, the primary government is reported separately from certain componentunits for which the primary government is financially accountable.

63



Measurement Focus, Basis of Accounting, and Financial Statement Presentation

The City reports the following major funds:

Property taxes, franchise taxes, intergovernmental revenue, licenses, and interest associated with thecurrent fiscal period are all considered to be susceptible to accrual and so have been recognized asrevenues of the current fiscal period. Only the portion of special assessments receivable due within thecurrent fiscal period is considered to be susceptible to accrual as revenue of the current period. All otherrevenue items are considered to be measurable and available only when cash is received by thegovernment.

General fund. This fund is the general operating fund of the City; it is used to account for all financialresources not accounted for and reported in another fund.

The government-wide financial statements are reported using the economic resources measurement focusand the accrual basis of accounting, as are the proprietary fund and fiduciary fund financial statements.Revenues are recorded when earned and expenses are recorded when a liability is incurred, regardless ofthe timing of related cash flows. Property taxes are recognized as revenues in the year for which they arelevied. Grants and similar items are recognized as revenue as soon as all eligibility requirements imposedby the provider have been met. Agency funds, a type of fiduciary fund, are unlike all other types of funds,reporting only assets and liabilities. Therefore, agency funds cannot be said to have a measurement focus.They do, however, use the accrual basis of accounting to recognize receivables and payables.

Street repair millage special revenue fund. This fund is used to account for the proceeds of a specialmillage to repair streets.

Governmental fund financial statements are reported using the current financial resources measurementfocus and the modified accrual basis of accounting. Revenues are recognized as soon as they are bothmeasurable and available. Revenues are considered to be available when they are collectible within thecurrent period or soon enough thereafter to pay liabilities of the current period. For this purpose, thegovernment considers revenues to be available if they are collected within 60 days of the end of thecurrent fiscal period or within one year for reimbursement-based grants. Expenditures generally arerecorded when a liability is incurred, as under accrual accounting. However, debt service expenditures, aswell as expenditures related to compensated absences and claims and judgments, are recorded only whenpayment is due.

The statement of activities demonstrates the degree to which the direct expenses of a given function orsegment are offset by program revenues. Direct expenses are those that are clearly identifiable with aspecific function or segment. Program revenues include (1) charges to customers or applicants whopurchase, use, or directly benefit from goods, services, or privileges provided by a given function orsegment and (2) grants and contributions that are restricted to meeting the operational or capitalrequirements of a particular function or segment. Taxes and other items not properly included amongprogram revenues are reported instead as general revenues.

Separate financial statements are provided for governmental funds, proprietary funds and fiduciary funds,even though the latter are excluded from the government-wide financial statements. Major individualgovernmental funds and major individual enterprise funds are reported as separate columns in the fundfinancial statements.

64



The solid waste fund accounts for the collection and disposal of the City’s solid waste and recycling.

Additionally, the government reports the following fund types:

The pension and other employee benefits trust funds account for the activities of the employees’retirement system and retiree health insurance plan.

The agency funds account for assets held for other governments in an agency capacity, including taxcollections, delinquent taxes receivable and other monies.

Internal service funds account for goods or services provided by the central stores, fleet services,information technology, project management, insurance and the maintenance facility (the "WheelerCenter") to the service areas of the City on a charges for services basis.

The parking system accounts for the operations of the City's parking structures, lots and meters.

The airport fund accounts for the operation of the City's airport including the rental of hangars and tie-down space.

The stormwater sewer system accounts for the collection and disposal of the City's stormwater.

Special revenue funds are used to account for and report the proceeds of specific revenue sources thatare restricted or committed to expenditure for specified purposes other than debt service or capitalprojects.

Debt service funds are used to account for and report financial resources that are restricted,committed, or assigned to expenditure for principal and interest.

Capital projects funds are used to account for and report financial resources that are restricted,committed, or assigned to expenditure for capital outlays, including the acquisition or construction ofcapital facilities and other capital assets.

The permanent fund accounts for monies provided by a private bequest to finance tree planting andmaintenance for the Elizabeth Dean Fund. The principal amount of the bequest is to remain intact andinvested. Investment earnings are used for the above stated purposes.

The government reports the following major enterprise funds:

The water supply system accounts for the provision of treated water to City and certain townshipresidents.

The sewage disposal system accounts for the collection and treatment of the sewage for City andcertain township residents.

As a general rule, the effect of interfund activity has been eliminated from the government-wide financialstatements. Exceptions to this general rule are payments in lieu of taxes and other charges between thegovernment’s water and sewer function and various other functions of the government. Elimination of thesecharges would distort the direct costs and program revenues reported for the various functions concerned.

65



Deposits and Investments

Investments are reported at fair value.

Receivables and Payables

The government’s cash and cash equivalents are considered to be cash on hand, demand deposits and short-term investments with original maturities of three months or less from the date of acquisition. Statestatutes authorize the government to deposit in the accounts of federally insured banks, credit unions, andsavings and loan associations, and to invest in obligations of the U.S. Treasury, certain commercial paper,repurchase agreements, bankers acceptances, and mutual funds composed of otherwise legal investments.

Activity between funds that are representative of lending/borrowing arrangements outstanding at the endof the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfundloans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans). All otheroutstanding balances between funds are reported as “due to/from other funds.” Any residual balancesoutstanding between the governmental activities and business-type activities are reported in thegovernment-wide financial statements as “internal balances”. Interfund balances at year-end relate toitems accrued after year-end related to interfund transfers. These items are repaid immediately in thenew year.

Amounts reported as program revenues include 1) charges to customers or applicants for goods, services,or privileges provided, 2) operating grants and contributions, and 3) capital grants and contributions,including special assessments. Internally dedicated resources are reported as general revenues rather thanas program revenues. Likewise, general revenues include all taxes.

Proprietary funds distinguish operating revenues and expenses from nonoperating items. Operatingrevenues and expenses generally result from providing services and producing and delivering goods inconnection with a proprietary fund’s principal ongoing operations. The principal operating revenues of thewastewater and water enterprise funds and of the government’s internal service funds are charges tocustomers for sales and services. The enterprise funds also recognize as operating revenues the portion oftap fees intended to recover the cost of connecting new customers to the system. Operating expenses forenterprise funds and internal service funds include the cost of sales and services, administrative expenses,and depreciation on capital assets. All revenues and expenses not meeting this definition are reported asnonoperating revenues and expenses.

The pension and other employee benefits trust funds are authorized by the State’s Pension Investment Act,as amended, to invest in common stocks, real estate, and various other investment instruments, subject tocertain limitations.

Restricted net position are assets that are subject to restrictions beyond the government’s control. Therestrictions may be externally imposed or imposed by law. When both restricted and unrestricted resourcesare available for use, it is the government’s policy to use restricted resources first, then unrestrictedresources as they are needed.

Assets, Liabilities, Deferred Outflows/Inflows of Resources, and Net Position or Equity

66



Inventories and Prepaid Items

Capital Assets

Buildings and improvements 40-50Improvements other than buildings 20-99Machinery, equipment and vehicles 3-15Intangible assets 5-20Infrastructure 15-25Drain benefit 20

Deferred Outflows of Resources

Inventories of materials and supplies are stated at cost using the first-in, first-out method. The cost isaccounted for as an expenditure in governmental funds and an expense in the proprietary funds at the timeinventories are used. Prepaid items represent payments made to vendors for goods and services applicableto future fiscal years. Inventories and prepaid items are offset by nonspendable fund balance ingovernmental funds.

In addition to assets, the statement of financial position will sometimes report a separate section fordeferred outflows of resources. This separate financial statement element represents a consumption of netposition that applies to one or more future periods and so will not be recognized as an outflow of resources(expense/expenditure) until then. The government reports deferred outflows of resources for changes inexpected and actual investment returns, assumptions, and benefits provided in its pension plans as well asfor the deferred loss on refunding. A deferred refunding loss results from the difference in the carryingvalue of refunded debt and its reacquisition price. This amount is deferred and amortized over the shorterof the life of the refunded or refunding debt.

The costs of normal maintenance and repairs that do not add to the value of the asset or materially extendassets lives are not capitalized. Major outlays for capital assets and improvements are capitalized asprojects are constructed. Interest incurred during the construction phase of capital assets of business-typeactivities, if any, is included as part of the capitalized value of the assets constructed. No such interestexpense was incurred during the current fiscal year.

Capital assets of the primary government are depreciated using the straight-line method over the followingestimated useful lives (in years):

Capital assets are reported in the applicable governmental or business-type activities columns in thegovernment-wide financial statements. Capital assets are defined by the government as assets with aninitial, individual cost of more than $5,000 and an estimated useful life in excess of two years. Such assetsare recorded at historical cost or estimated historical cost if purchased or constructed. Donated capitalassets are recorded at estimated fair value at the date of donation.

67



Compensated Absences

Deferred Inflows of Resources

Pensions

For purposes of measuring the net pension liability, deferred outflows of resources and deferred inflows ofresources related to pensions, and pension expense, information about the fiduciary net position of thePlan and additions to/deductions from the plan fiduciary net position have been determined on the samebasis as they are reported by the plan. For this purpose, benefit payments (including refunds of employeecontributions) are recognized when due and payable in accordance with the benefit terms. Investments arereported at fair value.

In addition to liabilities, the statement of financial position will sometimes report a separate section fordeferred inflows of resources. This separate financial statement element, deferred inflows of resources,represents an acquisition of net position that applies to one or more future periods and so will not berecognized as an inflow of resources (revenue) until that time. The governmental funds also reportunavailable revenues, which arise only under a modified accrual basis of accounting, that are reported asdeferred inflows of resources. These amounts are deferred and recognized as an inflow of resources in theperiod that the amounts become available.

The City accrues vacation pay, compensatory time off, severance pay for sick leave, and any salary-relatedpayments for these compensated absences. The current obligations of all funds and the long-termobligations of proprietary funds are recorded in the respective funds. City employees are granted vacationtime based on length of service. Most employees have the option of receiving compensatory time off in lieuof pay for overtime worked up to 40 hours. Sick pay is earned at the rate of one day per month, andunused sick days may be accumulated without limitation. An employee is paid, in most cases, a maximumof 960 unused sick hours and the total of any remaining accumulated hours upon retirement or death. Citypolicy provides for payment of unused vacation and compensatory time off, but not unused sick hours,should the employee terminate their employment other than via retirement or death. Paid time off that isexpected to be liquidated with expendable available financial resources is reported as an expenditure anda fund liability of the governmental fund that will pay it. Paid time off is accrued when incurred inproprietary funds and reported as a liability. For governmental funds, the current portion of the liabilityfor compensated absences reflects only the unpaid balance of reimbursable unused leave for employeesthat terminated by the fiscal year end. In accordance with GAAP, for the governmental funds, in the fundfinancial statements, the noncurrent portion of the compensated absences are considered long-term andtherefore, are not a fund liability and represents a reconciling item between the fund level and government-wide presentations. In addition to the proprietary funds, the general fund, and several nonmajor specialrevenue funds have been used to liquidate the liability for compensated absences.

68



Fund Balances

Statements of Cash Flows

Use of Estimates

Encumbrances

Governmental funds report nonspendable fund balance for amounts that cannot be spent because they areeither (a) not in spendable form or (b) legally or contractually required to be maintained intact. Restricted fund balance is reported when externally imposed constraints are placed on the use of resources bygrantors, contributors, or laws or regulations of other governments. Committed fund balance is reportedfor amounts that can only be used for specific purposes pursuant to constraints imposed by formal action ofthe government’s highest level of decision-making authority, the City Council. A formal resolution of theCity Council is required to establish, modify, or rescind a fund balance commitment. The City reportsassigned fund balance for amounts that are constrained by the government’s intent to be used for specificpurposes, but are neither restricted nor committed. City Council, by adoption of its Fund Balance Policy,designates the Chief Financial Officer as the authority to assign fund balance. Unassigned fund balance isthe residual classification for the general fund and any governmental funds reporting a deficit at year end.

When the government incurs an expenditure for purposes for which various fund balance classifications canbe used, it is the government’s policy to use restricted fund balance first, then committed, assigned, andfinally unassigned fund balance.

The preparation of financial statements in conformity with generally accepted accounting principlesrequires management to make significant estimates and assumptions that affect the reported amounts ofassets and liabilities and disclosures of contingent assets and liabilities at the date of the financialstatements and the reported amounts of revenues and expenses during the reporting period. Actual resultscould differ from those estimates.

The City presents statements of cash flows for all proprietary fund types. These statements, which havebeen prepared utilizing the direct method, analyze the net increase or decrease in cash and cashequivalents by source. For purposes of the statements of cash flows, the City considers all highly liquidinvestments purchased with an original maturity of three months or less and the deposits in the investmentfunds to be cash equivalents.

Encumbrances represent commitments related to unperformed contracts for goods or services.Encumbrance accounting (under which purchase orders, contracts and other commitments for theexpenditure of resources are recorded to reserve that portion of the applicable appropriation) is utilized inthe governmental funds. Outstanding encumbrances at year-end of $287,401 are included in assigned fundbalance of the general fund, $9,171,758 in restricted fund balance of the street repair millage specialrevenue fund, and $1,859,257 in the restricted or assigned fund balance of the other governmental funds.The encumbrances do not constitute expenditures or liabilities because the commitments will be honoredduring the subsequent year.

69



2. BUDGETARY CONTROLS AND INFORMATION

-

-

-

-

-

In late November, each department is given a "bottom line" amount for operations. The departmentthen determines the best way to allocate funds among expenditures to remain within the target whilemeeting the assigned goals.

Department budget requests are then submitted with expenditures outlined and areas of concernidentified so that adjustments can be made as needed. By allowing the departments to determine howfunds are spent within the department, the operating departments have a greater ownership in howthey provide services.

The City Administrator's recommended budget is submitted to City Council at the second meeting inApril. The City Council, with at least seven affirmative votes, must adopt the budget no later than theend of its second meeting in May. According to City Charter, should the City Council not adopt anamended budget, the City Administrator's recommended budget will automatically take effect assubmitted.

After the budget has been adopted, City Council may amend the budget by a concurring vote of notfewer than eight members.

Formal budgetary integration is employed as a management control device during the year. The Citypresents a comparison of annual budgets to actual results for all major governmental funds. Budgetedrevenue amounts represent the original budget modified by Council-authorized adjustments during the yearwhich were contingent upon new or additional revenue sources. Budgeted expenditure amounts representoriginal appropriations adjusted for supplemental appropriations during the year. Budgets are prepared inaccordance with GAAP using the modified accrual basis of accounting.

The City follows these procedures in establishing the budgetary data reflected in the basic financialstatements:

The City uses the "target based" budgeting technique. Under this system, the City Administratordetermines funding levels for each department by matching funding needs with available revenues.Targets are established based on anticipated revenues and growth in expenditures.

The City Administrator is required by City Charter to prepare and submit an annual budget to City Council.A budget is prepared for the general fund and special revenue funds; these budgets are prepared on themodified accrual basis and are adopted by City Council as required by the State of Michigan. Budgetarycontrol is maintained at the departmental level for the general fund. The City Administrator is authorizedto transfer budgeted amounts within general fund departments. Budgetary control for the special revenuefunds is maintained at the fund level. Revisions to a department total of the general fund or to the fundtotal of a special revenue fund must be approved by City Council; some supplemental budgetaryappropriations, of immaterial size, were necessary during the fiscal year. At the close of each year, theunencumbered balance of each appropriation reverts to the respective fund from which it was appropriatedand becomes subject to future appropriations. Any outstanding encumbrances are carried forward to thesucceeding fiscal year. Annual operating plans are prepared for debt service, capital projects, enterpriseand internal service funds (i.e., those funds not legally required to have adopted budgets under State law).

70



3. EXPENDITURES IN EXCESS OF APPROPRIATIONS AND NET POSITION DEFICIT

4. DEPOSITS AND INVESTMENTS

Primary ComponentGovernment Units Total

Statement of net positionCash 14,172,655$ 1,555,716$ 15,728,371$ Equity in pooled cash and investments 221,317,709 1,624,540 222,942,249 Investments 2,093,259 14,986,881 17,080,140

Statement of fiduciary net positionCash 91,214 - 91,214 Equity in pooled cash and investments 3,257,484 - 3,257,484 Investments 593,485,072 - 593,485,072

Total 834,417,393$ 18,167,137$ 852,584,530$

Deposits and investmentsBank deposits (demand accounts) 26,887,874$ Certificates of deposit due within one year 500,750 Certificates of deposit due in one to five years 250,000 Investments in securities, mutual funds and similar vehicles:

City investment pool 216,465,133 Employees' Retirement System 459,538,337 Retiree Health Care Trust Fund 133,946,735 Downtown Development Authority 14,986,881

Cash on hand 8,820

852,584,530$

The City Administrator is authorized to transfer appropriated funds between major expenditure categorieswithin departments. However, any revisions which alter the total appropriations of a department must beapproved by City Council. For budgetary purposes, the general fund is composed of several departments.Expenditures may not legally exceed appropriations at the department level.

The City utilizes an encumbrance system as a management control technique to assist in controllingexpenditures. Under this procedure, encumbrances representing purchase orders, contracts, and othercommitments are closely monitored throughout the fiscal year. All appropriations lapse at the end of thefiscal year, except for certain capital projects which are approved without regard to fiscal year. For any ofthese projects which are under construction at year-end, the appropriations are allowed to carry forwardwith the amount being adopted for the current budget year.

State statutes provide that a local unit shall not incur expenditures in excess of the amount appropriated.The approved budgets of the City were adopted on a department level basis for the general fund and thefund level for the special revenue funds. During the year ended June 30, 2016, the City did not incur anyexpenditures in excess of the amounts appropriated at the legal level of budgetary control.

The following is a reconciliation of deposit and investment balances as of June 30, 2016:

71



Deposits

Carrying BankAmount Balance Insured Uninsured

City cash pool 25,268,275$ 23,372,867$ 1,025,814$ 22,347,053$ 15th District Court 63,983 491,213 250,000 241,213 Downtown Development Authority 334,623 430,913 250,000 180,913 Housing Commission 1,220,993 1,541,932 500,000 1,041,932

Totals 26,887,874$ 25,836,925$ 2,025,814$ 23,811,111$

Investments - City Investment Pool

U.S. treasuries 82,788,403$ U.S. agencies 133,433,927 Money market accounts 242,803

Total Investments 216,465,133$

The City maintains an investment pool for all City funds. Each fund's portion of the investment pool isdisplayed on the balance sheet as "Equity in Pooled Cash and Investments." The cash resources of thepension and other employee benefit trust funds and certain component units are invested separately.

Michigan statutes and City policy authorize the City to invest in U.S. Treasury obligations, U.S. agencysecurities, federal instrumentality securities, repurchase agreements, money market accounts that limitassets of the fund to securities authorized in M.C.L. 129.91 as legal investments for a public corporation,eligible bankers acceptances, prime commercial paper, obligations of the State of Michigan or any of itspolitical subdivisions, investment pools, and joint interlocal investment ventures.

Custodial Credit Risk - Deposits. For deposits, custodial credit risk is the risk that, in the event of a bankfailure, the entity’s deposits may not be returned to the government. At year-end, the carrying amount,bank balance and federal depository insurance were as follows:

Following is a summary of the City's investments as of June 30, 2016:

The uninsured bank balance of $22,911,111 was exposed to custodial credit risk as it was uninsured anduncollateralized, except that the Housing Commission's uninsured balance was collateralized withgovernment securities having a fair value of $1,234,642 as of year-end.

The City’s depository policy does not specifically address this risk, although the City believes that due tothe dollar amounts of cash deposits and the limits of FDIC insurance, it is impractical to insure all bankdeposits. As a result, the City evaluates each financial institution with which it deposits City funds andassesses the level of risk of each institution; only those institutions with an acceptable estimated risk levelare used as depositories.

72



% of Portfolio

U.S. agencies Federal Farm Credit Bank 18.60%U.S. agencies Federal National Mortgage Association 18.17%U.S. agencies Federal Home Loan Bank 15.45%U.S. agencies Federal Home Loan Mortgage 9.42%

50% in prime commercial paper30% in eligible bankers acceptances30% in money market accounts20% in certificates of deposit10% in federal agency securities10% in obligations of the State of Michigan or any of its political subdivisions10% in investment pools (composed of otherwise legal investments)10% in joint interlocal investment ventures

Issuer

Tax funds collected on behalf of other taxing authorities and held pending disbursement are not subject tothe diversification limits above. No more than 5% of the total portfolio shall be invested in any one issuerof commercial paper, eligible bankers acceptances or obligations of the State of Michigan or any of itspolitical subdivisions.

Investment Type

The City’s investment policy states that the amount of investments shall not exceed the following limits ineach of the categories listed below as a percentage of the total portfolio.

Custodial Credit Risk - Investments. For investments, custodial credit risk is the risk that, in the event ofthe failure of the counterparty, the City will not be able to recover the value of its investments orcollateral securities that are in the possession of an outside party. The City’s investment policy requiresthat investment securities be held in third-party safekeeping by a designated institution and that thesafekeeping agent follow the procedure of delivery vs. payment. As of June 30, 2016, none of the City’sinvestments were exposed to risk since the securities are held in the City’s name by the counterparty.

Credit Risk. The City analyzes credit risk of banking institutions and issuers of securities prior to depositingor investing City funds. State law limits investments in certain types of investments to a prime or betterrating issued by nationally recognized statistical rating organizations (NRSROS). In addition to therestrictions placed on the City by Public Act 20 of 1943, the City’s investment policy further requires thatbanks in which the City invests public funds must have maintained an average Highline Banking DataServices Rating of 30 or better for the four most recent reporting quarters. Securities purchased by theCity always conform to the rating requirements set forth in Public Act 20. As of June 30, 2016, all of theCity’s investments in securities of the U.S. Treasury and U.S. agencies were rated AAA by Standard & Poor’s(S&P) and Aaa by Moody’s. All of the City’s investments comply with its policy regarding the types ofinvestments it may hold.

Concentration of Credit Risk. At June 30, 2016, the investment portfolio was concentrated as follows:

73



Investments Maturities (fair value by years)

InvestmentType Fair Value <1 1-5 6-10

U.S. treasuries 82,788,403$ 40,428,930$ 41,897,695$ 461,778$ U.S. agencies 133,433,927 15,030,950 113,402,877 5,000,100

216,222,330$ 55,459,880$ 155,300,572$ 5,461,878$

Investments - Employees' Retirement System

Interest Rate Risk. As of June 30, 2016, maturities of the City’s debt securities were as follows:

Fair Value. The City categorizes its fair value measurements within the fair value hierarchy established bygenerally accepted accounting principles. The hierarchy is based on the valuation inputs used to measurethe fair value of the asset. Level 1 inputs are quoted prices in active markets for identical assets; Level 2inputs are significant other observable inputs; Level 3 inputs are significant unobservable inputs.

The City's only recurring fair value measurements as of June 30, 2016 were related to its investments inU.S. treasuries, U.S agencies and money market cash funds. These investments are valued using quotedmarket pricing of the underlying securities (Level 1 inputs).

Of the above balances, $30,038,400 of U.S. agencies securities are callable.

The City does not have a formal policy relating to interest rate risk. However, the City will minimizeinterest rate risk, which is the risk that the market value of securities in the portfolio will fall due tochanges in market interest rates, by structuring the investment portfolio so that securities mature to meetcash requirements for ongoing operations, thereby avoiding the need to sell securities on the open marketprior to maturity. To the extent possible, the Treasurer shall match investments with anticipated cash flowrequirements. The City will not invest in securities maturing more than fifteen years from the date ofpurchase, and the weighted average maturity of the portfolio shall not exceed 6.5 years.

Deposits - The System does not maintain any checking or other demand/time deposit accounts. Amountsreported as cash in the statement of plan net position are composed entirely of amounts held by the City ofAnn Arbor as part of its cash pool. As a result, the insured and uninsured amounts related to theseaccounts cannot be determined.

Investments - The Michigan Public Employees Retirement Systems’ Investment Act, Public Act 314 of 1965,as amended, authorizes the System to invest in stocks, government and corporate securities, mortgages,real estate, and various other investment instruments, subject to certain limitations. The System'sgoverning body has the responsibility and authority to oversee the investment portfolio. Variousprofessional investment managers are contracted to assist in managing the System's investments; allinvestment decisions are subject to Michigan law and the investment policy established by the governingbody.

74



Target AllocationAllocation Range

EquitiesDomestic equities 31% 25% to 37%Developed foreign equities 12% 9% to 15%Emerging markets equities 6% 0% to 9%Private equities 3% 0% to 5%

52% 34% to 66%

Fixed incomeInvestment grade bonds 19% 15% to 24%TIPS (Treasury inflation-protected securities) 8% 0% to 10%High yield bonds 3% 1% to 5%Bank loans 2% 0% to 4%Emerging market debts 2% 0% to 4%

34% 16% to 47%

Other investmentsReal estate 9% 2% to 12%Natural resources 3% 0% to 5%Hedge funds 2% 1% to 5%Cash 0% <5%

14% 3% to 27%

Total investments 100%

The adopted asset allocation policy as of June 30, 2016, is as follows:

The investment allocation policy will be reviewed periodically to ensure that the objectives and constraintsremain relevant. However, the Trustees recognize the need for a stable long-term policy for the Systemand major changes to this policy will be made only when significant developments in the circumstances,objectives or constraints of the System occur.

Investment allocation policy - The System’s policy in regard to the allocation of invested assets isestablished and may be amended by the Retirement System Board of Trustees. The policy pursues aninvestment strategy that protects the financial health of the System and reduces risk through the prudentdiversification of the portfolio across a broad selection of distinct asset classes. System assets will beinvested in the broad investment categories and asset classes to achieve the allocation targets below.Recognizing that asset returns may vary, causing fluctuations in the relative dollar value levels of assetswithin classes, the System may not maintain strict adherence to the targets in the short-term, but mayallow the values to fluctuate within these ranges. Over the long-term, the System will strive to adhere tothe given targets as financially practicable and move toward target allocations in a prudent mannerconsistent with its fiduciary duty.

Asset Class

75



Domestic Foreign Total On LoanEquities

Common stock 24,842,593$ 358,572$ 25,201,165$ 11,681,548$ Common stock funds 155,775,124 54,349,889 210,125,013 - Private equity 7,400,495 - 7,400,495 -

188,018,212 54,708,461 242,726,673 11,681,548

Fixed incomeGovernment agency funds 88,699,777 - 88,699,777 - Corporate bonds - 2,746,837 2,746,837 - Corporate bond funds 18,042,577 6,929,513 24,972,090 - Bank loan participation 14,512,216 - 14,512,216 - Private credit 5,870,476 - 5,870,476 - Index linked government bonds 19,962,799 - 19,962,799 -

147,087,845 9,676,350 156,764,195 -

OtherReal estate 35,050,439 - 35,050,439 - Hedge funds 6,219,445 8,511,247 14,730,692 - Short-term investment funds 10,266,338 - 10,266,338 -

51,536,222 8,511,247 60,047,469 -

Total $ 386,642,279 $ 72,896,058 $ 459,538,337 $ 11,681,548

Custodial Credit Risk. For investments, custodial credit risk is the risk that, in the event of the failure ofthe counterparty to a transaction, the System will not be able to recover the value of its investments orcollateral securities that are in the possession of an outside party. The System’s investment policy requiresthat securities be held in trust by a third-party institution in the System’s name. As such, althoughuninsured and unregistered, the System’s investments are not exposed to custodial credit risk since thesecurities are held by the counterparty’s trust department in the System’s name. Short-term investments inmoney market funds are not exposed to custodial credit risk because their existence is not evidenced bysecurities that exist in physical or book form.

The System’s investments are held by an independent trust company. Following is a summary of theSystem’s investments as of June 30, 2016 (investments at fair value, as determined by quoted marketprice):

76



The System's fixed income securities consisted of the following at June 30, 2016:

88,699,777$ 2,746,837

24,972,090 14,512,216 5,870,476

19,962,799

156,764,195$

Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fairvalue of an investment. The System’s investment policy requires a maximum term to maturity of 30 yearsfor any single fixed income security. The System’s investment policy does not address weighted averageportfolio maturities.

Securities Lending. A contract approved by the System’s Board of Trustees, permits the System to lend itssecurities to broker-dealers and other entities (borrowers) for collateral that will be returned for the samesecurities in the future. The System’s custodial trust company manages the securities lending program andreceives securities, cash or irrevocable bank letters of credit as collateral. The collateral securities cannotbe pledged or sold by the System unless the borrower defaults. Collateral is initially pledged at 102 percentof the market value of the securities lent, and may not fall below 100 percent during the term of the loan.There are no restrictions on the amount of securities that can be loaned.

Private creditIndex linked government bonds

Corporate bond fundsCorporate bonds

Bank loan participation

Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to the magnitude ofthe System’s investment in a single issuer. The System’s investment policy requires that no more than 5% ofthe total fund be invested in any one company or governmental agency.

Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill itsobligations. Investments in any particular asset class may or may not be consistent with the objectives ofthe System. The investment policy statement specifically indicates permissible asset classes, including highyield fixed income and alternatives, in appropriate target percentages. The System's investments ingovernment agency funds, corporate bond funds, bank loan participation, private credit, and index linkedgovernment bonds (each of which are essentially funds) are not rated.

Government agency funds

Rate of return. For the year ended June 30, 2016, the annual money-weighted rate of return on planinvestments, net of investment expenses, was 0.5 percent. The money-weighted rate of return expressesinvestment performance, net of investment expense, adjusted for the changing amounts actually invested.

77



Level 1 Level 2 Level 3 Total Equities

Common stock 24,973,894$ 227,271$ -$ 25,201,165$ Common stock funds 16,148,156 193,976,857 - 210,125,013 Private equity - - 7,400,495 7,400,495

41,122,050 194,204,128 7,400,495 242,726,673

Fixed income

Government agency bonds - 88,699,777 - 88,699,777 Corporate bonds - - 2,746,837 2,746,837 Corporate bond funds 6,929,513 18,042,577 - 24,972,090 Bank loan participation - - 14,512,216 14,512,216 Private credit - - 5,870,476 5,870,476 Index linked government bonds 19,962,799 - - 19,962,799

26,892,312 106,742,354 23,129,529 156,764,195

OtherReal estate - - 35,050,439 35,050,439 Hedge funds - - 14,730,692 14,730,692 Short-term investment funds 10,266,338 - - 10,266,338

10,266,338 - 49,781,131 60,047,469

Total 78,280,700$ 300,946,482$ 80,311,155$ 459,538,337$

At year end, the System has no credit risk exposure to borrowers because the amounts the System owes theborrowers exceeds the amounts the borrowers owe the System. The contract with the System’s custodianrequires it to indemnify the System if the borrowers fail to return the securities (and if the collateral isinadequate to replace the securities lent) or fail to pay the System for income distributions by thesecurities’ issuers while the securities are on loan.

At June 30, 2016, the total collateral received from borrowers had a fair value of $11,853,116, all of whichwas cash.

Fair Value Measurements. The System categorizes the fair value measurements of its investments withinthe fair value hierarchy established by generally accepted accounting principles. Level 1 inputs are quotedprices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs – other than quotedprices – included within Level 1 that are observable for the asset or liability, either directly or indirectly.Finally, Level 3 inputs are unobservable and are based on estimates and assumptions. These levels aredetermined by the System's investment manager. These are determined at the fund level based on a reviewof the investment's class, structure, and what kind of securities are held in funds. The investment managerwill request the information from the fund manager, if necessary.

The System had the following recurring fair value measurements as of June 30, 2016:

78



Investments - Retiree Health Care Trust Fund

Domestic Foreign Total On Loan

Common stock 15,656,771$ -$ 15,656,771$ 9,717,127$ Common stock funds 36,321,271 20,176,224 56,497,495 - Corporate bond funds 30,473,673 3,381,557 33,855,230 - Bank loan participation 5,164,490 - 5,164,490 - Index linked government bonds 6,580,967 - 6,580,967 - Private credit 1,443,451 - 1,443,451 - Real estate 13,695,337 - 13,695,337 - Short-term fund 1,052,994 - 1,052,994 -

Total $ 110,388,954 $ 23,557,781 $ 133,946,735 $ 9,717,127

The Retiree Health Care Trust Fund is a voluntary employee benefit association (VEBA or "Association")under Section 501(c)(9) of the Internal Revenue Code.

The Association’s investments are held by an independent trust company. Following is a summary of theAssociation’s investments as of June 30, 2016:

Deposits - The Association does not maintain any checking or other demand/time deposit accounts.Amounts reported as cash in the statement of plan net position are composed entirely of amounts held bythe City of Ann Arbor as part of its cash pool. As a result, the insured and uninsured amounts related tothese accounts cannot be determined.

Investments - The Michigan Public Employees Retirement Associations’ Investment Act, Public Act 314 of1965, as amended, authorizes the Association to invest in stocks, government and corporate securities,mortgages, real estate, and various other investment instruments, subject to certain limitations. TheAssociation's governing body has the responsibility and authority to oversee the investment portfolio.Various professional investment managers are contracted to assist in managing the Association'sinvestments; all investment decisions are subject to Michigan law and the investment policy established bythe governing body.

Custodial Credit Risk. For investments, custodial credit risk is the risk that, in the event of the failure ofthe counterparty to a transaction, the Association will not be able to recover the value of its investments orcollateral securities that are in the possession of an outside party. The Association’s investment policyrequires that securities be held in trust by a third-party institution in the Association’s name. As such,although uninsured and unregistered, the Association's investments are not exposed to custodial credit risksince the securities are held by the counterparty’s trust department in the Association’s name. Short-terminvestments in money market funds are not exposed to custodial credit risk because their existence is notevidenced by securities that exist in physical or book form.

79



Corporate bond funds 33,855,230$ Bank loan participation 5,164,490 Index linked government bonds 6,580,967

45,600,687$

The Association's fixed income securities, which are not rated for credit risk, consisted of the following atJune 30, 2016:

Interest Rate Risk. Interest rate risk is the risk that changes in interest rates will adversely affect the fairvalue of an investment. The Association’s investment policy requires a maximum term to maturity of 30years for any single fixed income security. The Association’s investment policy does not address weightedaverage portfolio maturities.

Concentration of Credit Risk. Concentration of credit risk is the risk of loss attributed to the magnitude ofthe Association’s investment in a single issuer. The Association’s investment policy requires that no morethan 5% of the total fund be invested in any one company or governmental agency.

Securities Lending. A contract approved by the Association’s Board of Trustees, permits the VEBA to lendits securities to broker-dealers and other entities (borrowers) for collateral that will be returned for thesame securities in the future. The Association’s custodial trust company manages the securities lendingprogram and receives securities, cash or irrevocable bank letters of credit as collateral. The collateralsecurities cannot be pledged or sold by the Association unless the borrower defaults. Collateral is initiallypledged at 102 percent of the market value of the securities lent, and may not fall below 100 percentduring the term of the loan. There are no restrictions on the amount of securities that can be loaned.

At year end, the Association has no credit risk exposure to borrowers because the amounts the Associationowes the borrowers exceeds the amounts the borrowers owe the Association. The contract with theAssociation’s custodian requires it to indemnify the Association if the borrowers fail to return the securities(and if the collateral is inadequate to replace the securities lent) or fail to pay the Association for incomedistributions by the securities’ issuers while the securities are on loan.

At June 30, 2016, the total collateral received from borrowers had a fair value of $9,842,505, all of whichwas cash.

Credit Risk. Credit risk is the risk that an issuer or other counterparty to an investment will not fulfill itsobligations. Investments in any particular asset class may or may not be consistent with the objectives ofthe System. The investment policy statement specifically indicates permissible asset classes, including highyield fixed income and alternatives, in appropriate target percentages.

80



Level 1 Level 2 Level 3 Total

Common stock $ 15,656,771 $ - $ - 15,656,771$ Common stock funds 3,941,274 52,556,221 - 56,497,495 Corporate bond funds 3,381,557 30,473,673 - 33,855,230 Bank loan participation - - 5,164,490 5,164,490 Index linked government bonds 6,580,967 - - 6,580,967 Private credit - - 1,443,451 1,443,451 Real estate 5,682,732 - 8,012,605 13,695,337 Short-term fund 1,052,994 - - 1,052,994

$ 36,296,295 $ 83,029,894 $ 14,620,546 $ 133,946,735

Investments - DDA Component Unit

U.S. government agencies 10,563,419$ Money market accounts 4,423,462

Total Investments 14,986,881$

Custodial Credit Risk - Deposits. As of June 30, 2016, the carrying amounts of the DDA's deposits were$334,423 and the bank balance was $430,913 of which $180,913 was exposed to custodial credit riskbecause it was uninsured and uncollateralized. For the deposits held at the City of Ann Arbor, it isimpossible to determine custodial credit risk since the DDA's deposits are pooled with other City deposits.

Custodial Credit Risk – Investment. Following is a summary of the DDA’s investments as of June 30, 2016:

For an investment, custodial credit risk is the risk that, in the event of the failure of the counterparty, theDDA will not be able to recover the value of its investments or collateral securities that are in thepossession of an outside party. State law does not require and the DDA does not have a policy forinvestment custodial credit risk. Money market accounts are unclassified as to custodial credit risk as theinvested amount is part of an investment pool. The investments in U.S. government agencies above areuninsured and unregistered, with securities held by the agent in the DDA's name.

Fair Value Measurements. The System categorizes its fair value measurements within the fair valuehierarchy established by generally accepted accounting principles. The System had the following recurringfair value measurements as of June 30, 2016:

The System had the following recurring fair value measurements as of June 30, 2016:

Total investments

81



As of June 30, 2016, the maturities of the DDA's investments in U.S. agencies were as follows:

Investment MoreType Fair Value 1-5 6-10 Than 10

U.S. agencies 10,563,419$ 10,061,733$ 501,686$ -$

Concentration of Credit Risk. State law limits allowable investments but does not limit concentration ofcredit risk as identified in the list of authorized investments above. The DDA does not have an investmentpolicy that limits concentration of credit risk. All investments held at year-end are reported above.

Interest Rate Risk. State law limits the allowable investments and the maturities of some of the allowableinvestments as identified in the list of investments above. The DDA does not have an investment policy thatsets specific limits in excess of state law on investment maturities as a means of managing its exposure tofair value losses arising from increasing interest rates.

Investments Maturities (fair value by years)

Fair Value. The Authority categorizes its fair value measurements within the fair value hierarchyestablished by generally accepted accounting principles. The Authority's only recurring fair valuemeasurements as of June 30, 2016 were related to its investments in government agency funds. Theseinvestments are valued using quoted market pricing of the underlying securities (Level 1 inputs).

Credit Risk. State law limits investments to specific government securities, certificates of deposits andbank accounts with qualified financial institutions, commercial paper with specific maximum maturitiesand ratings when purchased, bankers acceptances of specific financial institutions, qualified mutual fundsand qualified external investment pools as identified in the list of authorized investments above. The DDAdoes not have an investment policy that sets specific limits in excess of state law on investment credit risk.As of June 30, 2016, all of the investments in U.S. agencies were rated AAA by Moody’s.

82



5. RECEIVABLES

Governmental Activities

Business-type Activities

Taxes $ 143,232 $ 34,314 Accounts 1,816,504 14,543,936 Special assessments 549,489 125,617 Accrued interest and dividends 6,424 - Improvement charges 1,637 253,852 Loans 19,078 - Due from other governments 4,989,105 7,752,566

$ 7,525,469 $ 22,710,285

6. INTERFUND RECEIVABLES AND PAYABLES

Due from Other Funds

Due to Other Funds

General fund 82,228$ -$ Nonmajor governmental funds - 5,178 Airport enterprise fund - 77,050

82,228$ 82,228$

General fund 584,586$ -$ Airport enterprise fund - 584,586

584,586$ 584,586$

Activity between funds that are representative of lending/borrowing arrangements outstanding at the endof the fiscal year are referred to as either “due to/from other funds” (i.e., the current portion of interfundloans) or “advances to/from other funds” (i.e., the noncurrent portion of interfund loans). All otheroutstanding balances between funds are reported as “due to/from other funds.” Any residual balancesoutstanding between the governmental activities and business-type activities are reported in thegovernment-wide financial statements as “internal balances”. Interfund balances at year-end relate toitems accrued after year-end related to interfund transfers. These items are repaid immediately in thenew year.

Receivables in the governmental and business-type activities, of which $483,001 and $298,137,respectively, are not expected to be collected within one year, are as follows:

Advances from Other Funds

For the year ended June 30, 2016, interfund receivables and payables consisted of the following:

Advances to Other Funds

83



7. CAPITAL ASSETS

Beginning Balance Additions Disposals

Ending Balance

Governmental activitiesCapital assets not being depreciated:

Land 59,835,599$ 34,150$ -$ 59,869,749$ Construction in progress 3,413,194 2,401,293 (2,823,171) 2,991,316

Total capital assets not depreciated 63,248,793 2,435,443 (2,823,171) 62,861,065

Capital assets being depreciated:Buildings 168,805,530 - (1,172,671) 167,632,859 Improvements other than buildings 20,468,223 2,693,137 (32,888) 23,128,472 Machinery and equipment 15,703,339 925,060 (677,656) 15,950,743 Vehicles 17,941,755 2,547,764 (1,011,933) 19,477,586 Intangible assets 1,173,590 - - 1,173,590 Infrastructure 776,174,603 25,731,870 (5,069,268) 796,837,205

Total capital assets being depreciated 1,000,267,040 31,897,831 (7,964,416) 1,024,200,455

Less accumulated depreciation for:Buildings (22,725,204) (4,165,102) 566,790 (26,323,516) Improvements other than buildings (8,276,049) (724,148) 27,478 (8,972,719) Machinery and equipment (12,926,568) (879,053) 514,228 (13,291,393) Vehicles (12,090,124) (2,075,014) 1,011,933 (13,153,205) Intangible assets (938,873) (234,717) - (1,173,590) Infrastructure (193,671,067) (27,989,323) 5,060,457 (216,599,933)

Total accumulated depreciation (250,627,885) (36,067,357) 7,180,886 (279,514,356)

Total capital assets being depreciated, net 749,639,155 (4,169,526) (783,530) 744,686,099

Governmental activities capital assets, net 812,887,948$ (1,734,083)$ (3,606,701)$ 807,547,164$

Depreciation of governmental activities by functionGeneral government 447,673$ Public safety 128,224 Public works 31,674,851 Culture and recreation 1,138,102 Capital assets held by the government's internal service

are charged to various activities based on asset usage 2,678,507

Total depreciation expense - governmental activities 36,067,357$

Capital asset activity for the year ended June 30, 2016 was as follows:

Depreciation expense was charged to governmental activities functions/programs as follows:

84



Beginning Balance Additions Disposals

Ending Balance

Business-type activitiesCapital assets not being depreciated:

Land 7,291,349$ -$ -$ 7,291,349$ Construction in progress 163,592,379 28,273,120 (59,179,984) 132,685,515

Total capital assets not depreciated 170,883,728 28,273,120 (59,179,984) 139,976,864

Capital assets being depreciated:Buildings 141,556,985 51,888,563 (2,881,724) 190,563,824 Improvements other than buildings 207,253,311 7,317,477 - 214,570,788 Machinery and equipment 28,609,147 331,674 (97,576) 28,843,245 Vehicles 2,814,578 319,978 (349,009) 2,785,547 Drain benefit 3,662,284 - - 3,662,284

Total capital assets being depreciated 383,896,305 59,857,692 (3,328,309) 440,425,688

Less accumulated depreciation for:Buildings (70,129,254) (3,551,258) 2,685,840 (70,994,672) Improvements other than buildings (80,084,656) (4,076,406) - (84,161,062) Machinery and equipment (23,011,993) (1,233,664) 97,576 (24,148,081) Vehicles (2,275,189) (188,215) 349,009 (2,114,395) Drain benefit - (183,114) - (183,114)

Total accumulated depreciation (175,501,092) (9,232,657) 3,132,425 (181,601,324)

Total capital assets being depreciated, net 208,395,213 50,625,035 (195,884) 258,824,364

Business-type activities capital assets, net 379,278,941$ 78,898,155$ (59,375,868)$ 398,801,228$

8. PAYABLES

Payables in the governmental activities are 18.5% accrued liabilities, 53.1% vendors, 14.7% claims payable, 11.1% depositspayable and 2.6% due to other governments. Payables in the business-type activities are 3.5% accrued liabilities, 61.8%vendors, 34.0% claims payable and 0.7% deposits payable.

85



9. LEASES

2017 141,605$ 2018 114,7282019 19,336

Total 275,669$

2017 911,331$ 2018 901,1992019 904,0172020 807,8252021 585,668

2022-2026 2,379,4382027-2031 1,006,3912032-2036 563,496

Total 8,059,365$

The City as lessor has other lease arrangements which have been appropriately accounted for as operating leases. Minimumlease payments receivable on such leases are immaterial in amount.

Operating Leases Payable. The City is the lessee of various properties (primarily office and storage space, as well as parkingfacilities) under operating leases for periods through 2019. The expenses and related revenues in connection with the leasesare recorded in the general, special revenue and pension trust funds. The total rent expense for fiscal year 2016 was$236,225. The following is a table of future minimum noncancellable lease payments by the City:

The City as lessee has other lease arrangements, which have been appropriately accounted for as operating leases. Minimumlease payments on such leases are immaterial in amount.

Operating Leases Receivable. The City is the lessor of various parking, office and airport facilities under operating leases forperiods through 2036. Revenues and the related expenses for these leases are recorded in various funds. The total rentrevenue for fiscal year 2016 was $1,091,869. The total revenue includes $531,972 for cell towers, $29,610 for office space,$347,069 for airport hangers, and $183,218 for other rentals. All related City assets are fully depreciated. The following is atable of future minimum noncancellable lease payments to the City:

86



10. TRANSFERS

Street Water SewageRepair Supply Disposal Stormwater Solid Internal

General Millage NMGF System System Airport System Waste Service Totals

Transfers OutGeneral -$ 364,285$ 3,134,125$ 58,656$ -$ -$ -$ -$ -$ 3,557,066$ SRM - - 36,529 854,876 - - - - - 891,405 NMGF 188,703 - 4,739,648 90,456 - - - - - 5,018,807 WTR 1,134,600 1,318,712 176,200 - - - - - - 2,629,512 SWR - 556,244 795 730,945 - - 12,462 - - 1,300,446 AIR - - - 7,884 - - - - - 7,884 STRM 84,996 2,164,609 - 296,477 (101,204) - - - - 2,444,878 SW 30,000 - 225,778 185,904 - - - - - 441,682 ISF 3,173,880 2,487,384 1,986,642 1,716,976 734,904 20,772 667,692 1,086,720 399,972 12,274,942

4,612,179$ 6,891,234$ 10,299,717$ 3,942,174$ 633,700$ 20,772$ 680,154$ 1,086,720$ 399,972$ 28,566,622$

SRM - Street repair millage special revenue fundNMGF - Nonmajor governmental fundsWTR - Water supply system enterprise fundSWR - Sewer disposal system enterprise fundAIR - Airport enterprise fundSTRM - Stormwater system enterprise fundSW - Solid waste enterprise fundISF - Internal service funds

Transfers are used to: (1) move unrestricted revenues collected in the general fund to finance various programs accounted for in other fundsin accordance with budgetary authorizations; (2) move revenues from the fund that is required to collect them to the fund that is requiredor allowed to expend them; and (3) move receipts restricted to or allowed for debt service from the funds collecting the receipts to thedebt service funds as debt service payments become due.

Transfers In

A summary of interfund transfers for the year ended June 30, 2016, is as follows:

87



11. CONTINGENT LIABILITIES

12. LONG-TERM DEBT

Litigation. Various lawsuits are pending against the City, some of which are for substantial amounts. Onthe basis of opinions and information furnished by the City Attorney, it is the judgment of Citymanagement that the ultimate liability, if any, resulting from such lawsuits would not materially affect thefinancial position of the City.

Landfill. The City owns and maintains a closed landfill in full compliance with Michigan Department ofEnvironmental Quality (MDEQ) requirements. The City had received approval for an onsite and (interim)offsite Remedial Action Plan (RAP) that has been implemented. This implementation included a slurry wallalmost two miles in length enclosing most of the landfill. As part of these requirements, the City hasposted a $1,000,000 letter of credit to ensure compliance with the landfill cleanup regulations. The City isworking on a final RAP and evaluating the feasibility of treating the collected landfill groundwater prior todischarge to the sanitary sewer. Treating the water onsite with discharge to surface or groundwater mayreduce annual operating costs because of reduced payments for discharge to the sanitary system. Capitalcosts associated with the landfill cleanup were funded by a series of voter-approved bonds totaling$28,000,000. Operating and maintenance costs for the closed landfill are funded out of the annual solidwaste budget. A liability has been accrued in the solid waste fund for offsite remediation in the amount of$7,125,794. These costs will be funded through the City’s earmarked solid waste (refuse collection)property tax levy. The projects to be accomplished are subject to major changes (both in the nature ofthe work to be accomplished and in the cost thereof) due to inflation, changes in technology or changes inregulatory requirements.

Grants. Amounts received or receivable from grantor agencies are subject to audit and adjustment bygrantor agencies, primarily the federal government. Any disallowed claims, including amounts alreadycollected, may constitute a liability of the applicable funds. The amount, if any, of expenditures whichmay be disallowed by the grantor cannot be determined at this time, although the City expects suchamounts to be immaterial.

Wetland Restoration. MDEQ has issued a permit to the City of Ann Arbor for wetland restoration. The Citywas required to obtain a $90,650 letter of credit in favor of MDEQ to ensure compliance with its wetlandrestoration requirements. A site inspection by the MDEQ determined that the wetlands are beginning toconform to the conditions of the permit and authorized a 50 percent reduction in the required financialassurance. The total amount of the letter of credit is now $45,325 and shall remain in force until the endof the monitoring period.

General obligation bonds. The government issues general obligation bonds to provide funds for theacquisition and construction of major capital facilities. General obligation bonds have been issued for bothgovernmental and business-type activities.

88



Year of Interest Original AmountMaturity Rates Amount Outstanding

Governmental activities2002 special assessment (G.O. portion) 2017 4.4 - 4.7% 290,000$ 25,000$ 2008 court and police facilities 2038 4.0 - 5.0% 27,660,000 24,665,000 2009 capital improvements (BAB) 2035 3.5 - 6.5% 49,420,000 43,265,000 2012 transportation fund 2023 2.0 - 2.4% 2,670,000 1,770,000 2013 1st and Washington (series A) 2032 1.75 - 3.0% 4,480,000 3,925,000 2013 1st and Washington (series B) 2032 2.0 - 3.75% 4,045,000 3,510,000 2013 clean energy 2024 4.25 - 4.34% 560,000 427,000 2015 open space preservation refunding 2034 2.0 - 3.375% 16,235,000 16,235,000 2015 maintenance facility refunding 2029 2.0 - 3.0% 17,710,000 17,710,000

Total governmental activities 123,070,000$ 111,532,000$

Business-type activities2007 parking 2017 4.0 - 4.25% 4,250,000$ 205,000$ 2009 parking - refunding 2017 3.0 - 3.5% 3,570,000 555,000 2012 parking - refunding 2022 2.0% 2,230,000 1,400,000 2015 parking - refunding 2020 2.0 - 3.0% 6,335,000 4,905,000 2016 parking - refunding 2027 2.0% 2,790,000 2,790,000

Total business-type activities 19,175,000$ 9,855,000$

Annual debt service requirements to maturity for general obligation bonds are as follows:

Governmental Activities Business-type Activities

Principal Interest Principal Interest

2017 4,778,000$ 3,944,662$ 2,450,000$ 313,203$ 2018 4,899,000 3,820,131 1,870,000 229,942 2019 5,028,000 3,687,333 1,865,000 147,983 2020 5,198,000 3,547,521 1,190,000 78,392 2021 5,354,000 3,402,501 500,000 46,667 2022-26 28,675,000 14,501,191 1,675,000 111,650 2027-31 30,495,000 9,263,780 305,000 4,067 2032-36 23,670,000 3,511,562 - - 2037-38 3,435,000 259,750 - -

111,532,000$ 45,938,431$ 9,855,000$ 931,904$

General obligation bonds are direct obligations and pledge the full faith and credit of the government.These bonds are issued as 10 to 20-year serial bonds with varying amounts of principal maturing each year.General obligation bonds currently outstanding are as follows:

89



Refunded Debt


Business-type activities2008 water 2018 4.0% 23,375,000$ 2,400,000$ 2012 water - refunding 2024 2.0 - 2.5% 10,450,000 6,080,000 2016 water - refunding 2027 2.0 - 2.5% 16,285,000 16,285,000 2008 sewer 2019 3.50 - 4.00% 24,550,000 2,550,000 2013 sewer - refunding 2025 3.25 - 4.75% 17,985,000 16,175,000 2016 sewer - refunding 2031 2.0 - 2.5% 19,280,000 19,280,000

111,925,000$ 62,770,000$

Principal Interest

2017 5,590,000$ 1,414,921$ 2018 5,295,000 1,241,656 2019 5,450,000 1,093,204 2020 5,310,000 985,321 2021 5,415,000 868,625 2022-26 25,550,000 2,396,772 2027-31 10,160,000 413,758

62,770,000$ 8,414,257$

Revenue bonds. The government issues revenue bonds where the income derived from the acquired orconstructed assets is pledged to pay debt service. Revenue bonds currently outstanding are as follows:

Total business-type activities

Annual debt service requirements to maturity for revenue bonds (business-type activities) are as follows:

During fiscal year 2016, the City issued $17,710,000 of refunding bonds to advance refund $18,231,140 ofthe 2006 general obligation maintenance facility bonds to provide resources to purchase U.S. governmentsecurities that were placed in an irrevocable trust to generate resources for all future debt servicepayments. As a result, the refunded bonds are considered to be defeased and the liability has beenremoved from the governmental activities. The refunding resulted in a savings of $4,133,888 and aneconomic gain of $3,110,043.

Also during fiscal year 2016, the City issued $2,790,000 of refunding bonds to partially advance refund$2,789,716 of the 2007 parking facility capital improvement bonds to provide resources to purchase U.S.government securities that were placed in an irrevocable trust to generate resources for all future debtservice payments. As a result, the refunded bonds are considered to be defeased and the liability has beenremoved from the business-type activities. The refunding resulted in a savings of $296,154 and aneconomic gain of $269,211.

90



Refunded Debt


Business-type activitiesDWRF #7319-01 2031 2.50% 4,575,000$ 3,630,000$ DWRF #7146-01 2024 2.125% 557,950 237,950 DWRF #7325-01 2030 2.50% 624,750 458,271 DWRF #7333-01 2032 2.50% 5,614,250 4,055,604 DWRF #7362-01 2034 2.50% 8,864,396 7,987,720 DWRF #7375-01 2035 2.00% 3,025,000 2,545,244 2004 SWQIF #3002-01 2024 1.625% 874,672 384,672 2005 SWQIF #3002-02 2025 1.625% 879,382 429,382 2006 SWQIF #3002-03 2026 1.625% 889,903 479,903 2007 SWQIF #3002-04 2027 1.625% 964,976 569,976 2008 SWQIF #3002-05 2028 2.50% 900,000 595,000 2009 SWQIF #3010-01 2029 2.50% 1,310,000 920,000

continued…

Revolving loans. The government borrows from State of Michigan revolving loan funds where the incomederived from the acquired or constructed assets is pledged to pay debt service. Revolving loans currentlyoutstanding are as follows:

During fiscal year 2016, the City issued $16,285,000 of refunding bonds to partially advance refund$16,708,402 of the water supply system revenue bonds, series 2008-A to provide resources to purchase U.S.government securities that were placed in an irrevocable trust to generate resources for all future debtservice payments. As a result, the refunded bonds are considered to be defeased and the liability has beenremoved from the business-type activities. The refunding resulted in a savings of $2,326,381 and aneconomic gain of $1,937,509.

Also during fiscal year 2016, the City issued $19,280,000 of refunding bonds to partially advance refund$19,685,655 of the sewage disposal system revenue bonds, series 2008-A to provide resources to purchaseU.S. government securities that were placed in an irrevocable trust to generate resources for all futuredebt service payments. As a result, the refunded bonds are considered to be defeased and the liability hasbeen removed from the business-type activities. The refunding resulted in a savings of $3,769,987 and aneconomic gain of $2,836,507.

91




2010 SWQIF #3010-02 2030 2.50% 1,320,000$ 990,000$ 2012 SWQIF #3010-03 2032 2.50% 1,365,000 1,139,760 2013 SWQIF #3010-04 2033 2.50% 891,703 746,703 2012 CWRF #5441-01 2036 2.50% 34,407,832 34,407,832 2013 CWRF #5441-02 2038 2.00% 73,305,000 54,721,544

140,369,814$ 114,299,561$

concluded.

Principal Interest

2017 2,747,832$ 2,466,383$ 2018 2,815,000 2,481,639 2019 5,890,000 2,414,005 2020 6,020,000 2,299,823 2021 6,155,000 2,183,034 2022-26 32,661,907 9,069,696 2027-31 34,993,247 5,768,102 2032-36 33,412,067 2,416,305 2037-38 8,720,000 195,954

133,415,053 29,294,941 Remaining available to draw (19,115,492) -

114,299,561$ 29,294,941$


Governmental activities2002 special assessment 2017 4.4 - 4.7% 525,000$ 15,000$

Annual debt service requirements to maturity for revolving loans (business-type activities) are as follows:

Special assessment bonds. The government issues special assessment bonds to finance certaininfrastructure projects will be repaid through the assessment of benefitting property owners. Specialassessment bonds are backed by the full faith and credit of the City to the extent that liens enforcedagainst property included in the special assessment district are insufficient to service the debt. Specialassessment bonds currently outstanding are as follows:

Total business-type activities

92



Annual debt service requirements to maturity for special assessment bonds are as follows:

Principal Interest

2017 15,000$ 705$


Business-type activities2006 Mallets Creek project 2028 1.625% 2,180,000$ 1,016,883$ 2009 Pioneer High project 2031 2.5% 2,661,000 1,991,126 2010 Stadium Blvd phase I 2029 2.5% 165,000 130,000 2010 Stadium Blvd phase II 2032 2.5% 953,386 763,995 2010 West Park project 2031 2.5% 1,035,000 788,020 2010 Sylvan Ave project 2030 2.5% 405,000 310,000 2011 Swift Run cistern 2032 2.5% 26,362 22,862 2011 County Farm streambank 2032 2.5% 349,699 287,199 2011 Stadium Bridge project 2033 2.5% 162,209 137,209 2011 Burns Park project 2032 2.5% 1,122,487 867,360 2011 Traver Creek cistern 2032 2.5% 206,794 153,762 2011 Allen Creek cistern I 2032 2.5% 140,746 120,746 2011 Allen Creek cistern II 2032 2.5% 31,261 27,761 2012 Leslie Park project 2033 2.5% 717,106 569,353 2012 Willard Street project 2032 2.5% 123,819 101,319 2012 SRF tree planting 2033 2.5% 167,467 149,967 2013 Huron River infrastructure I 2034 2.5% 232,500 162,345 2013 Huron River infrastructure II 2035 2.0% 278,379 268,379 2013 Allen Creek Miller Ave 2034 2.0% 805,723 736,373 2013 Allen Creek Madison Ave 2034 2.0% 890,130 800,466 2013 Allen Creek Fourth Ave I 2033 2.0% 175,163 155,163 2013 Allen Creek Fourth Ave II 2034 2.0% 211,099 191,099 2014 Allen Creek Fairgrounds 2034 2.0 - 3.5% 2,430,000 2,265,000 2014 Malletts Creek Stone School 2035 2.5% 2,025,000 1,901,859 2014 Mallets Creek Springwater 2035 2.5% 332,447 317,602 2014 SRF (Washtenaw County) TBD 2.00% TBD 114,376 2015 Huron Green Tree Planting 2036 2.5% 215,000 27,453 2015 Geddes 2037 2.5% 1,015,000 343,955

19,057,777$ 14,721,632$

Drain notes. The government's share of the debt for drainage district projects are as follows:

93



Annual debt service requirements to maturity for the drain notes are as follows:

Principal Interest

2017 722,689$ 337,741$ 2018 785,597 321,720 2019 799,895 305,587 2020 814,895 288,771 2021 843,370 271,524 2022-26 4,518,843 1,074,692 2027-31 4,804,350 546,957 2032-36 2,207,005 92,158 2037 65,000 441

15,561,644 3,239,591 Remaining available to draw (954,388) - Unscheduled maturities 114,376 -

14,721,632$ 3,239,591$

Equipment 211,528$ Less: accumulated depreciation (66,983)

Net book value 144,545$

2017 42,305$ 2018 21,154

Present value of futureminimum lease payments 63,459$

TBD = the maturities and the City's portion of the total original amount of the project (which is beingmanaged by Washtenaw County) is yet to be determined.

Capital leases. The City has entered into certain lease agreements as lessee for financing of twomaterials recovery facility loaders. These lease agreements qualify as capital leases for accountingpurposes and, therefore, have been recorded at the present value of the future minimum lease paymentsas of the date of their inception. The following is an analysis of the items recorded under capital leases inthe enterprise funds as of June 30, 2016:

The following is a schedule of the future minimum lease payments under these capital leases, and thepresent value of the net minimum lease payments at June 30, 2016:

94



Beginning Balance Additions Deductions

Ending Balance

Due Within One Year

Primary governmentGovernmental activities

General obligation bonds 115,775,000$ 17,710,000$ (21,953,000)$ 111,532,000$ 4,778,000$ Special assessment bonds 35,000 - (20,000) 15,000 15,000 Deferred amounts:

For issuance premiums 195,042 416,162 (6,117) 605,087 34,343 For issuance discounts (345,712) - 127,448 (218,264) (8,892)

Compensated absences 13,619,261 4,349,999 (5,102,262) 12,866,998 5,102,263

Total governmentalactivities debt 129,278,591$ 22,476,161$ (26,953,931)$ 124,800,821$ 9,920,714$

Business-type activitiesGeneral obligation bonds 12,140,000$ 2,790,000$ (5,075,000)$ 9,855,000$ 2,450,000$ Revenue bonds 65,755,000 35,565,000 (38,550,000) 62,770,000 5,590,000 Revolving loans 93,440,278 22,389,114 (1,529,831) 114,299,561 2,747,832 Drain notes 13,827,347 1,666,833 (772,548) 14,721,632 722,689 Capital leases 105,764 - (42,305) 63,459 42,305 Deferred amounts:

For issuance premiums 879,012 609,741 (273,192) 1,215,561 127,652 For issuance discounts (96,690) - 83,002 (13,688) (9,912)

Compensated absences 2,102,219 1,090,049 (932,837) 2,259,431 932,835

Total business-typeactivities debt 188,152,930$ 64,110,737$ (47,092,711)$ 205,170,956$ 12,603,401$

Component unitDowntown Development

Authority purchaseagreement 579,626$ -$ (269,211)$ 310,415$ 285,815$

Downtown Development Authority compensatedabsences - 172,923 (2,056) 170,867 2,056

Housing Commission compensated absences 52,959 77,790 (76,870) 53,879 37,152

Total component unit 632,585$ 250,713$ (348,137)$ 535,161$ 325,023$

Changes in long-term debt. Long-term debt activity for fiscal 2016 was as follows:

95



13. RISK MANAGEMENT

Current Year Beginning of Claims and Balance atFiscal Year Changes in Claim Fiscal

Liability Estimates Payments Year End

2015 4,518,707$ 17,539,684$ (17,777,409)$ 4,280,982$ 2016 4,280,982 16,191,797 (17,620,229) 2,852,550

14. PROPERTY TAXES

The City is exposed to various risks of loss related to torts; theft of, damage to, and destruction of assets;errors and omissions; injuries to employees; and natural disasters. During fiscal year 1969, the Cityestablished the insurance internal service fund to account for and finance its uninsured risk of loss. Underthis program, coverage is provided for up to a maximum of $500,000 for each general liability claim,$50,000 for each property damage claim, and Blue Cross Blue Shield health insurance claims. The Citypurchases (where coverage is available and properly priced) commercial insurance for claims in excess ofcoverage provided by the insurance fund. Settled claims have not exceeded this commercial coverage inany of the past three fiscal years.

All funds of the City participate in the insurance program and make payments to the insurance fund basedon estimates of the amounts needed to pay prior and current year claims and to establish a reserve forincurred but not reported (IBNR) losses. The IBNR reserve was $1,221,473 at June 30, 2016 and is includedin estimated claims payable. The total estimated claims payable of $2,852,550 is reflected in theinsurance fund at June 30, 2016. A liability for claims must be reported if information prior to the issuanceof the financial statements indicates it is probable that a liability has been incurred at the date of thefinancial statements and the amount of the loss can be reasonably estimated. Changes in the fund's claimliability amount for the last two years are summarized below:

Each July 1, the City property tax is levied and becomes a lien on the related property, the value of whichis equalized by the State of Michigan and limited by Act 415 of 1994. The City's operating tax rate leviedJuly 1, 2015 as controlled by the Headlee Amendment, Act 415 and City Charter, is 6.1657 mills raising$31.5 million. Other tax rates and amounts raised are as follows: employee benefits (2.0552) raising $10.5million, refuse collection (2.4660) raising $12.6 million, Ann Arbor Transportation Authority (2.0552) raising$10.5 million, street & sidewalk repair (2.1242) raising $10.85 million, parks maintenance and repair(1.0996) raising $5.6 million, and open space and parkland preservation Millage (0.4777) raising $2.44million. Real and personal property located in the City as of December 31, 2014 were assessed andequalized at $6,116,285,818, representing 50% of estimated current value. Act 415 of 1994 limits annualincreases in taxable value to 5% or the Consumer Price Index, whichever is less. The 2015 taxable value onMarch 14, 2016, was $5,105,352,756. Property taxes are due July 31st of each year and any delinquent realproperty taxes are turned over to Washtenaw County for collection the following March 1st. Delinquentpersonal property taxes are immaterial.

96



15. EMPLOYEES' RETIREMENT SYSTEM

General Information about the Pension Plan

996 145 688

1,829

Active members

Property tax revenue of the discretely presented component units is derived pursuant to tax incrementfinancing agreements between those entities (i.e., the DDA and SmartZone LDFA) and the variousapplicable taxing districts. Real and personal property taxes are levied and attach as an enforceable lien onproperties located within the boundaries of the tax increment financing district. The City of Ann Arbor billsand collects the taxes on behalf of the component units. Delinquent taxes on ad valorem real property arepurchased by the County of Washtenaw. Property tax revenue is recognized in the year it is levied in boththe government-wide financial statements and in the fund financial statements.

Plan administration. The City of Ann Arbor Employees' Retirement Plan is a single-employer definedbenefit plan administered by the City of Ann Arbor Employees’ Retirement System (CAAERS). CAAERSprovides retirement, disability and death benefits to plan members and beneficiaries. Cost of livingadjustments are provided to members and beneficiaries per the Ann Arbor City Code Section 1:573 ofChapter 18. Chapter 17.1 of the Ann Arbor City Charter assigns the authority to establish and amendbenefit provisions to City Council. CAAERS issues a publicly available financial report that may be obtainedby writing to City of Ann Arbor Employees’ Retirement System, 532 South Maple Road, Ann Arbor, Michigan,48103 or by calling 734-794-6710.

Management of the System is vested in the City of Ann Arbor Employees' Retirement System Board ofTrustees, which consists of nine members, three are elected (representing fire, police and general Cityemployees), five are appointed by the City Council of the City of Ann Arbor and one is the Chief FinancialOfficer of the City of Ann Arbor, who serves as ex-officio member.

Retirees and beneficiaries currently receiving benefitsTerminated employees entitled to but not yet receiving benefits

Benefits provided. The System provides retirement, disability, and death benefits. Retirement benefits forgeneral plan members are calculated as 2.5 percent of the member’s final three-year average salary or five-year average salary depending on hire date, times the member’s years of service. Benefits for public safetyplan members (police and fire) are calculated as 2.75 percent of the member’s final three-year averagesalary or five-year average depending on hire date, times the member’s years of service. General planmembers with 20 years of service are eligible to retire at age 50 with an early retirement reduction of.333% for each month that retirement precedes the normal retirement date. Public safety plan memberswith 20 years of service are eligible to retire at age 50 with an early retirement reduction of .333% for eachmonth that retirement precedes the normal retirement date.

Plan membership. At June 30, 2015, the date of the latest actuarial valuation, System membershipconsisted of the following:

Total membership

97



Inflation 3.5 percentSalary increases 3.5 percent, average, including inflationInvestment rate of return 7.0 percent, net of pension plan

investment expense, including inflationMortality rate RP-2000 Combined Table

Net pension liability. The total pension liability was determined by an actuarial valuation as of June 30,2015 (and rolled forward to June 30, 2016), using the following actuarial assumptions, applied to allperiods included in the measurement:

These actuarial assumptions were based on the results of an actuarial experience study for the periodJuly 1, 2008 through June 30, 2013.

Contributions. All plan members are required to contribute 6% of annual compensation. The City isrequired to contribute at an actuarially determined rate; the rates for 2016 were 24.7% to 29.1% of annualcovered payroll, respectively, depending on employee group. Plan provisions and contributionrequirements are established and can be amended by the City Council. System administrative costs arefinanced through investment earnings.

General plan members may retire with an unreduced benefit at age 50 after 25 years of service, or age 60with 5 or 10 years of service depending on hire date. Public safety plan members may retire at any ageafter 25 years of service, or at age 55 with 5 or 10 years of service depending on hire date. Deferredmembers may retire at age 60 with 5 or 10 years of service depending on date of hire. All plan membersare eligible for non-duty disability benefits after 5 or 10 years depending on date of hire, and for duty-related disability benefits upon hire. Disability retirement benefits are determined in the same manner asretirement benefits but are payable immediately without an actuarial reduction. A plan member wholeaves City service may withdraw his or her contributions plus any accumulated interest. A withdrawal mayreduce or even eliminate any future benefit payable under a deferred vested retirement.

The System offers a minimum benefit of $9,800 adjusted by a cost of living factor each year and proratedfor less than 20 years of service. In addition, annually, the Board of Trustees, in consultation with itsactuary and upon receipt of the actuarial report for each fiscal year, determines whether to grant apermanent pension benefit adjustment or pay a one-time supplemental benefit based upon the amount, ifany, of funds in the pension adjustment account which may be distributed to eligible retirees andbeneficiaries. The aggregate cost of such benefit adjustment or supplemental benefit distribution is fundedby a transfer from the pension adjustment account to the pension reserve. No pension benefit adjustmentor supplemental benefit can be paid unless the amount available in the pension adjustment account isequal to or greater than 1% of the total pension payroll. The term "total pension payroll” means the totalamount of pension benefits paid to retirees and beneficiaries in the prior fiscal year as reflected in theannual actuarial report.

98



Long-termTarget Allocation Expected Real

Allocation Range Rate of Return

EquitiesDomestic equities 31.0% 25% to 37% 9.3%Developed foreign equities 12.0% 9% to 15% 10.1%Emerging markets equities 6.0% 0% to 9% 11.5%Private equities 3.0% 0% to 5% 10.0%

52.0% 34% to 66%

Fixed incomeInvestment grade bonds 19.0% 15% to 24% 2.8-5.5%TIPS (Treasury inflation-protected securities) 8.0% 0% to 10% 3.2%High yield bonds 3.0% 1% to 5% 6.8%Bank loans 2.0% 0% to 4% 5.9%Emerging market debts 2.0% 0% to 4% 6.9%

34.0% 16% to 47%

Other investmentsReal estate 9.0% 2% to 12% 6.9-10.2%Natural resources 3.0% 0% to 5% 10.3%Hedge funds 2.0% 1% to 5% 5.9%Cash 0.0% <5% 2.5%

14.0% 3% to 27%

100.0%

The long-term expected rate of return on pension plan investments was determined using a building-blockmethod in which best-estimate ranges of expected future real rates of return (expected returns, net ofinvestment expense and inflation) are developed for each major asset class. These ranges are combined toproduce the long-term expected rate of return by weighting the expected future real rates of return by thetarget asset allocation percentage and by adding expected inflation. Best estimates of arithmetic real ratesof return for each major asset class included in the pension plan’s target asset allocation as of June 30,2016 (see the discussion of the System's investment allocation policy) are summarized in the followingtable:

Discount rate. The discount rate used to measure the total pension liability was 7.0 percent. Theprojection of cash flows used to determine the discount rate assumed that plan member contributions willbe made at the current contribution rate and that City contributions will be made at rates equal to thedifference between actuarially determined contribution rates and the member rate. Based on thoseassumptions, the pension plan’s fiduciary net position was projected to be available to make all projectedfuture benefit payments of current plan members. Therefore, the long-term expected rate of return onpension plan investments was applied to all periods of projected benefit payments to determine the totalpension liability.

Asset Class

99



Total Pension Plan Fiduciary Net PensionLiability Net Position Liability

(a) (b) (a) - (b)

Balances at June 30, 2015 536,810,895$ 472,373,897$ 64,436,998$

Changes for the year:Service cost 8,729,000 - 8,729,000 Interest 36,925,458 - 36,925,458 Differences between expected and

actual experience (3,826,000) - (3,826,000) Employer contributions - 13,352,412 (13,352,412) Employee contributions - 3,139,266 (3,139,266) Net investment income - 2,434,339 (2,434,339) Benefit payments, including refunds of

employee contributions (33,960,032) (33,960,032) - Administrative expense - (719,561) 719,561

Net changes 7,868,426 (15,753,576) 23,622,002

Balances at June 30, 2016 544,679,321$ 456,620,321$ 88,059,000$

Primary government 87,413,179$ Fiduciary funds 645,821

88,059,000$

1% Current 1%Decrease Discount Increase

(6.0%) (7.0%) (8.0%)

City's net pension liability 147,643,000$ 88,059,000$ 37,741,000$

Sensitivity of the net pension liability to changes in the discount rate. The following presents the netpension liability of the City, calculated using the discount rate of 7.0 percent, as well as what the City’snet pension liability would be if it were calculated using a discount rate that is 1-percentage-point lower(6.0 percent) or 1-percentage-point higher (8.0 percent) than the current rate:

Pension plan fiduciary net position. Detailed information about the pension plan’s fiduciary net position isavailable in the separately issued Plan financial statements.

Changes in the Net Pension Liability. The components of the change in the net pension liability aresummarized as follows:

100



Net DeferredDeferred Deferred Outflows

Outflows of Inflows of (Inflows) ofResources Resources Resources

Difference between expected and actual experience 100,150$ 2,599,717$ (2,499,567)$ Net difference between projected and actual

earnings on pension plan investments 31,373,002 - 31,373,002

Total 31,473,152$ 2,599,717$ 28,873,435$

Statement of net position 31,056,938$ 2,580,651$ 28,476,287$ Statement of fiduciary net position 416,214 19,066 397,148

Total 31,473,152$ 2,599,717$ 28,873,435$

Year Ended NetJune 30, Amount

2017 7,316,341$ 2018 7,237,649 2019 8,306,045 2020 6,013,400

$ 28,873,435

16. OTHER POSTEMPLOYMENT BENEFITS

Pension expense and deferred outflows of resources related to pensions. For the year ended June 30,2016, the City recognized pension expense of $18,049,341. At June 30, 2016, the City reported deferredoutflows and inflows of resources related to pensions from the following sources:

Amounts reported as deferred outflows and inflows of resources related to pension will be recognized inpension expense as follows:

The City of Ann Arbor Retiree Health Care Benefits Plan (the "Plan") is a single-employer defined benefithealthcare plan administered by the City of Ann Arbor Employees’ Retirement System. The plan providescertain health care and life insurance benefits for eligible retired employees and their dependents inaccordance with Ann Arbor City Code Chapter 21. Substantially all the City’s employees may becomeeligible for these benefits if they retire directly from City employment. These and similar benefits foractive employees are provided by various insurance companies. Health insurance benefits’ are providedthrough an administrative service contract under which the City reimburses the administrator for claimspaid plus an administration fee. The Plan issues a publicly available financial report that may be obtainedby writing to City of Ann Arbor Employees’ Retirement System, 532 South Maple Road, Ann Arbor, Michigan,48103 or by calling 734-794-6710.

101



Annual required contribution $ 11,179,000 Interest on net OPEB obligation 336,696 Adjustment to annual required contribution (210,696) Net OPEB cost 11,305,000 Other adjustments (93,937) Contributions made 15,171,011 Change in net OPEB obligation (3,959,948) Net OPEB obligation, beginning of year 4,809,936

Net OPEB obligation, end of year 849,988$

Percentage of Annual OPEB

Year Ended Annual OPEB Cost Net OPEB June 30, Cost Contributed Obligation

2016 11,305,000$ 134% 849,988$ 2015 12,145,999 123% 4,809,936 2014 12,296,122 124% 7,643,669

The contribution requirements of plan members and the City are established and may be amended by theCity Council. The required contribution is based on projected pay-as-you-go financing requirements, withan additional amount to prefund benefits as determined annually by the actuary. For fiscal year 2016, theCity contributed $15,171,011 to the plan, including $12,095,622 for current premiums and an additional$3,075,389 to prefund benefits.

The City’s annual other postemployment benefit (OPEB) cost is calculated based on the annual requiredcontribution of the employer (ARC), an amount actuarially determined in accordance with the parametersof GASB Statement 45. The ARC represents a level of funding that, if paid on an ongoing basis, is projectedto cover normal cost each year and amortize any unfunded actuarial liabilities over a period not to exceed30 years. The following table shows the components of the City’s annual OPEB cost for the year, theamount actually contributed to the plan, and changes in the City’s net OPEB obligation:

The City’s annual OPEB cost, the percentage of annual OPEB cost contributed to the plan, and the newOPEB obligation for 2016 and the prior two years were as follows:

Three-Year Trend Information

The Plan’s financial statements are prepared on the accrual basis of accounting. Member contributions, ifany, are recognized in the period in which they are due. The City’s contributions are recognized when dueand the employer has made a formal commitment to provide them. Benefits and refunds are recognizedwhen due and payable in accordance with the terms of the plan.

The Plan's investments are stated at fair value which is determined as follows: (a) short-term investmentsare reported at cost, which approximates fair value; (b) securities traded on a national or internationalexchange are valued at the last reported sales price at current exchange rates; (c) investments for whichmarket quotations are not readily available are valued at their fair values as determined by the custodianunder the direction of the System's governing body, with the assistance of a valuation service; and (d) cashdeposits are reported at carrying amounts which reasonably approximates fair value.

102



17. PERMANENT FUND

Projections of benefits for financial reporting purposes are based on the substantive plan (the plan asunderstood by the employer and the plan members) and include the types of benefits provided at the timeof each valuation and the historical pattern of sharing of benefit costs between the employer and planmembers to that point. The actuarial methods and assumptions used include techniques that are designedto reduce the effects of short-term volatility and actuarial accrued liabilities and the actuarial value ofassets, consistent with the long-term perspective of the calculations.

The June 30, 2015, actuarial valuation used the entry age actuarial cost method. The actuarialassumptions included a 7.0 percent investment rate of return (net of administrative expenses), which isthe expected long-term investment returns on plan assets calculated based on the funded level of the planat the valuation date, and an annual healthcare cost trend rate of 8.25 percent initially, reduced bydecrements to an ultimate rate of 4.5 percent after 16 years. Both rates include a 3.5 percent inflationassumption. The actuarial value of assets was determined using techniques that spread the effects of short-term volatility in the market value of investments over a five-year period. The UAAL is being amortized asa level percentage of projected payroll contributions on an open basis over 30 years.

In 1964, the City became the recipient of an endowment from Elizabeth Dean which is recorded as apermanent fund. The corpus of the trust is to remain invested and may not be liquidated in order togenerate investment income. This investment income is to be used for the purchase and maintenance oftrees in the City of Ann Arbor. Net appreciation on investments is not considered investment income untilrealized. The amount in the Elizabeth Dean fund is shown as restricted for endowment on the statement ofnet position. The corpus of the trust is and shall remain $1,984,000. Fund balance at June 30, 2016 was$2,189,541, representing the corpus of the trust and appreciation of investments from prior years. Thisamount is reflected in cash, equity in pooled cash, investments and accrued interest. The corpus of thetrust is restricted to the limitations established by the trust and is considered nonspendable. The entireamount exceeding the corpus, $1,984,000, is also restricted to the limitations established by the trust, butis available for expenditure and is restricted as to use.

Actuarial valuations of an ongoing plan involve estimates of the value of reported amounts and assumptionsabout the probability of occurrence of events far into the future. Examples include assumptions aboutfuture employment, mortality, and the healthcare cost trend. Amounts determined regarding the fundedstatus of the plan and the annual required contributions of the employer are subject to continual revisionas actual results are compared with past expectations and new estimates are made about the future. Theschedules of funding progress and employer contributions, presented as required supplementaryinformation following the notes to the financial statements, present multi-year trend information aboutwhether the actuarial value of plan assets is increasing or decreasing over time relative to the actuarialaccrued liabilities for benefits.

As of June 30, 2015, the most recent actuarial valuation date, the plan was 47.9 percent funded. Theactuarial accrued liability for benefits was $276.0 million, and the actuarial value of assets was $132.2million, resulting in an unfunded actuarial accrued liability (UAAL) of $143.8 million. The covered payroll(annual payroll of active employees covered by the plan) was $48.8 million, and the ratio of the UAAL tothe covered payroll was 294.8 percent.

103



18. SIGNIFICANT COMMITMENTS

19. ADVANCES FROM POOLED INVESTMENTS

Repayment Schedules

Fiscal Year Principal Interest (4.45%) Principal Interest (4.09%)

2017 27,369$ 9,465$ 77,050$ 26,281$ 2018 28,601 8,234 80,234 23,098 2019 29,887 6,947 83,549 19,782 2020 31,232 5,602 87,001 16,330 2021 32,637 4,197 90,596 12,736 2022 34,106 2,728 94,339 8,993 2023 35,641 1,194 98,237 5,094 2024 - - 50,630 1,035

219,473$ 38,367$ 661,636$ 113,349$

Total principal 881,109$ Total interest 151,716 Total requirements 1,032,825$

The City’s general fund provided two advances in fiscal year 2009. The first advance was made to theRetirement System for $400,000 for the purchase of the new retirement office. The retirement boarddetermined it would be cost effective to purchase office space rather than to rent. It was determined thatthe City could provide the funds to the Retirement System at a lower interest rate than any financialinstitution. An agreement was reached between the City and Retirement System to advance $400,000 at4.45% with a 15-year repayment schedule shown below.

The second advance was made to the Airport fund for the renovation of the airport hangars at the AnnArbor Airport. It was determined that the City could provide the funds to the Airport at a lower interestrate than any financial institution. An agreement was reached between the City and Airport to advance$1,150,000 at 4.09% with a 15-year repayment schedule shown below.

2009 Retirement ($400,000) 2009 Airport ($1,150,000) 7/1/2008; Due 3/1 & 9/1 7/3/2008; Due 6/1 & 12/1

As of June 30, 2016, the City had $11,265,470 in construction commitments for various projects includingwastewater treatment plant reconstruction, resurfacing of streets, bridge reconstruction and other roadimprovements. The commitments will be satisfied using millage proceeds, fund balance and bondproceeds.

104



20. DETAILS OF FUND BALANCE CATEGORIES AND CLASSIFICATIONS

Street Nonmajor Total Repair Governmental Governmental

General Millage Funds Funds

NonspendableLong-term advances 584,586$ -$ -$ 584,586$ Inventories 34,725 - - 34,725 Trust corpus - - 1,984,000 1,984,000

Total nonspendable 619,311 - 1,984,000 2,603,311

RestrictedDebt service - - 1,087,240 1,087,240 Culture and recreation - - 15,933,178 15,933,178 Road maintenance and

repairs - - 20,380,993 20,380,993 Road construction - 13,264,960 - 13,264,960 Law enforcement - - 975,944 975,944 Energy projects - - 100,000 100,000 Community television network - - 3,660,092 3,660,092 Major grants - - 773,909 773,909

Total restricted - 13,264,960 42,911,356 56,176,316

CommittedCulture and recreation - - 57,640 57,640 Energy projects - - 270,485 270,485 Special assistance - - 5,403 5,403 Construction code - - 3,834,672 3,834,672 Cemetery perpetual care - - 96,672 96,672 Alternative transportation - - 319,718 319,718

Total committed - - 4,584,590 4,584,590

AssignedCapital projects - - 5,832,928 5,832,928 Future market needs 453,720 - - 453,720 Affordable housing fund initiatives 695,853 - - 695,853 Subsequent years expenditures and

potential retirement payouts 8,035,700 - - 8,035,700 Total assigned 9,185,273 - 5,832,928 15,018,201

Unassigned 15,330,765 - - 15,330,765

Total fund balances 25,135,349$ 13,264,960$ 55,312,874$ 93,713,183$

Fund balance classifications that comprise a hierarchy based primarily on the extent to which agovernment is bound to observe constraints imposed upon the use of the resources reported ingovernmental funds, is as follows:

105



21. NET INVESTMENT IN CAPITAL ASSETS

Governmental Business-type Activities Activities

Capital assetsNot being depreciated 62,861,065$ 139,976,864$ Being depreciated 744,686,099 258,824,364

Total capital assets 807,547,164 398,801,228

Less related debtGeneral obligation bonds (111,532,000) (9,855,000) Revenue bonds - (62,770,000) Revolving loans - (114,299,561) Drain notes - (14,721,632) Special assessment debt (15,000) - Capital leases - (63,459) Deferred amounts:

For issuance premiums (605,087) (1,215,561) For issuance discounts 218,264 13,688 On refunding 488,408 3,027,832

Net investment in capital assets 696,101,749$ 198,917,535$

Below is a calculation of the amount shown on the statement of net position for net investment in capitalassets:

106

REQUIRED SUPPLEMENTARY INFORMATION

107


Required Supplementary InformationEmployees' Retirement System

Schedule of Changes in the City's Net Pension Liability and Related Ratios

2014 2015 2016Change in total pension liability

Service cost 9,802,000$ 9,760,000$ 8,729,000$ Interest 34,400,755 35,978,096 36,925,458 Differences between expected

and actual experience 3,834,000 279,000 (3,826,000) Benefit payments, including refunds

of member contributions (32,011,444) (32,667,512) (33,960,032) Net change in total pension liability 16,025,311 13,349,584 7,868,426

Total pension liability, beginning 507,436,000 523,461,311 536,810,895

Total pension liability, ending (a) 523,461,311 536,810,895 544,679,321

Change in plan fiduciary net positionContributions - employer 11,227,290 13,091,474 13,352,412 Contributions - member 2,948,177 3,013,353 3,139,266 Net investment income 60,253,683 20,144,251 2,434,339 Benefit payments, including refunds

of member contributions (32,011,444) (32,667,512) (33,960,032) Administrative expense (644,051) (683,980) (719,561) Net change in plan fiduciary net position 41,773,655 2,897,586 (15,753,576)

Plan fiduciary net position, beginning, before restatement 427,911,656 469,685,311 472,373,897

Restatement for pension liability - (209,000) -

Plan fiduciary net position, ending (b) 469,685,311 472,373,897 456,620,321

City's net pension liability, ending (a)-(b) 53,776,000$ 64,436,998$ 88,059,000$

Plan fiduciary net position as a percentageof the total pension liability 89.73% 88.00% 83.83%

Covered-employee payroll 47,956,745$ 49,638,000$ 46,887,000$

City's net pension liability as apercentage of covered payroll 112.13% 129.81% 187.81%

Note: GASB 67 was implemented in fiscal year 2014. This schedule is being built prospectively. Ultimately, tenyears of data will be presented.

Fiscal Year Ended June 30,

108



Schedule of the Net Pension Liability

Fiscal Year Ended

June 30, Total Pension

LiabilityPlan Net Position

Net Pension Liability

Plan Net Position as

Percentage of Total Pension

Liability

Covered- Employee

Payroll

Net Pension Liability as

Percentage of Covered Payroll

2014 523,461,311$ 469,685,311$ 53,776,000$ 89.73% 47,956,745$ 112.13%2015 536,810,895 472,373,897 64,436,998 88.00% 49,638,000 129.81%2016 544,679,321 456,620,321 88,059,000 83.83% 46,887,000 187.81%


109



Schedule of Contributions

Fiscal Year Ending

June 30,

Actuarially Determined Contribution

Contributions in Relation to the Actuarially

Determined Contribution

Contribution Deficiency (Excess)

Covered- Employee

Payroll

Contributions as Percentage of Covered-Employee

Payroll

2014 11,217,000$ 11,227,290$ (10,290)$ 47,956,745$ 23.4%2015 12,327,000 13,091,474 (764,474) 49,638,000 26.4%2016 12,233,000 13,352,412 (1,119,412) 46,887,000 28.5%

Notes to Schedule of Contributions

Valuation date

Other information

Methods and assumptions used to determine contribution rates:Actuarial cost method Entry age normalAmortization method Level percentage of payroll, closedRemaining amortization period 25 yearsAsset valuation method 5-year smoothed marketInflation 3.5%Salary increases 3.5% including inflationInvestment rate of return 7.0% net of pension plan investment expense,

including inflationMortality rates RP-2000 combined table


Actuarially determined contribution rates are calculated as of June 30 that is 12months prior to the beginning of the fiscal year for which the contributions arereported.There were no benefit changes during the year.

110



Schedule of Investment Returns

Fiscal Year Ending

June 30,

Annual

Return (1)

2013 12.96%2014 14.01%2015 4.35%2016 0.50%

(1) Annual money-weighted rate of return, net of investment expenses


111


Required Supplementary InformationRetiree Healthcare Trust Fund

Actuarial

Accrued UAAL as a

Actuarial Liability Unfunded Percentage

Actuarial Value of (AAL) - AAL Funded Covered of Covered

Valuation Assets Entry Age (UAAL) Ratio Payroll Payroll

Date (a) (b) (b-a) (a / b) (c) ((b-a) / c)

6/30/2015 132,162$ 275,912$ 143,750$ 47.9% 48,759$ 294.8%

6/30/2014 116,566 264,164 147,598 44.1% 47,957 307.8%

6/30/2013 99,822 258,853 159,031 38.6% 45,063 352.9%

6/30/2012 87,660 249,844 162,184 35.1% 44,004 368.6%

6/30/2011 82,416 241,122 158,706 34.2% 45,921 345.6%

6/30/2010 73,205 242,842 169,637 30.1% 48,688 348.4%

6/30/2009 70,770 232,180 161,410 30.5% 51,076 316.0%

Annual Current Pre-funding

Year Ended Required Premiums Contributions Percentage

June 30, Contributions Paid by City to VEBA Trust Contributed

2016 11,179,000$ 12,095,622$ 3,075,389$ 135.7%

2015 11,974,000 10,758,954 4,220,778 125.1%

2014 12,203,000 10,650,463 4,537,637 124.5%

2013 12,379,000 9,207,043 5,790,086 121.1%

2012 14,859,285 8,889,686 2,163,202 74.4%

2011 14,395,148 9,181,437 4,839,659 97.4%

2010 14,284,470 9,349,438 927,417 71.9%

Schedule of Employer Contributions

Schedule of Funding Progress

(in thousands)

112

COMBINING AND INDIVIDUAL FUND FINANCIALSTATEMENTS AND SCHEDULES

113


114


Nonmajor Governmental Funds

Special Revenue Funds

Energy Projects - to account for funding of City Energy Consumption Improvement projects.

Local Law Enforcement Block Grant - to account for federal grant monies received forfingerprinting equipment.

Community Television Network - to account for the costs of running the City's community accesschannels on the local cable television system. Revenues are derived primarily from franchise fees.

Homeland Security - to account for federal Office of Homeland Security grant money.

Major Streets - to account for repairs, maintenance and construction on the City's major streets.The revenues consist primarily of State-shared gasoline and weight tax collections.

Local Streets - to account for repairs, maintenance and construction on the City's local streets.The revenues consist primarily of State-shared gasoline and weight tax collections.

Court Facilities - to account for a court fee to pay for facility improvements for the district court.

Open Space and Parkland Preservation - to account for funds derived from property tax millageand bond proceeds earmarked for parks acquisition and development rights for open space.

Bandemer - to account for rental income used to maintain and operate Bandemer Park.

Construction Code – to account for the costs of planning and development activities related toconstruction. Revenues are derived primarily from licenses and permits.

Drug Enforcement - to account for confiscated property and money related to drug lawenforcement activity and provide funds for future enforcement activity.

Federal Equitable Sharing Forfeiture - to account for monies received as a result of jointoperations with federal law enforcement. These monies are restricted for use in future lawenforcement activities.

Parks Memorial and Contributions - to account for the proceeds of various contributions to theParks System to erect memorials or finance special parks improvement projects.

Metro Expansion - to account for the monies passed through from telecom companies for thepurpose of maintaining the roadway (above, below, and adjacent to) right of ways.

Special Assistance - to account for funds provided by a utility bill checkoff to provide assistance toneedy citizens.

continued…

115


Nonmajor Governmental Funds

Special Revenue Funds (Concluded)

Open Space Endowment - to account for funds allotted for the perpetual care of lands purchasedwith the City’s Open Space and Parkland Preservation Millage.

Police and Fire Relief - to account for the receipt of investment earnings on previously transferredGeneral fund monies. These earnings are used to subsidize the incomes of certain beneficiaries ofdeceased police officers and firefighters.

Cemetery Perpetual Care - to account for the receipt and expenditures of fees paid for theperpetual care of gravesites at the City-owned Fairview Cemetery.

Art In Public Places – to account for funds provided by capital improvements projects for public artequal to one percent of the construction costs, with a maximum of $250,000 per project.

Alternative Transportation - to account for funding set aside for the City’s alternativetransportation program.

Michigan Justice Training - to account for State funds used for law enforcement training.

Parks Maintenance and Capital Improvements Millage - to account for funds derived from propertytax millage earmarked for parks maintenance and capital improvements of the parks system.

Major Grants - to account for various grant monies other than community development.

Debt Service Funds

General Debt Service - to accumulate tax revenues and transfers in for payment of principal andinterest on non-bonded debt and general obligation bonds sold for various capital purposes.

Special Assessment Bonds - to accumulate revenues for payment of principal and interest ongeneral obligation bonds sold to finance various special assessment projects. The primary sourcesof revenues are special assessments and related revenues (including interest and penalties).

Capital Projects Funds

Maintenance Facility – to account for revenues and expenditures related to the construction of thenew maintenance facility.

Municipal Center - to account for revenues expended for the construction of a new City facility forPolice and District Courts.

General Capital Improvements - to account for capital project expenditures for various non-bonded improvements to certain City-owned facilities.

Permanent Fund

Elizabeth R. Dean Trust Fund - to account for monies provided by a private bequest to finance treeplanting and maintenance. The principal amount of the bequest is to remain intact and invested.Investment earnings are used for the above stated purposes.

116


Combining Balance SheetNonmajor Governmental FundsJune 30, 2016

Local Law Community HomelandEnergy Enforcement Television Security

Projects Block Grant Network Fund

AssetsCash 56,148$ -$ -$ -$ Equity in pooled cash and investments 240,645 243 3,138,782 - Investments, at fair value - - - - Receivables:

Taxes - - - - Accounts 375 - 569,737 - Special assessments 444,383 - - - Accrued interest and dividends - - - - Loans 19,078 - - -

Due from other governments - - - 7,593

Total assets 760,629$ 243$ 3,708,519$ 7,593$

LiabilitiesAccounts payable -$ -$ 4,537$ -$ Accrued liabilities 93 - 43,890 - Due to other funds - - - 5,178 Deposits payable - - - -

Total liabilities 93 - 48,427 5,178

Deferred inflows of resourcesUnavailable revenue 390,051 - - 2,265

Fund balancesNonspendable - - - - Restricted for:

Debt service - - - - Culture and recreation - - - - Road maintenance and repairs - - - - Law enforcement - 243 - 150 Other purposes 100,000 - 3,660,092 -

Committed for:Culture and recreation - - - - Other purposes 270,485 - - -

Assigned to capital projects - - - -

Total fund balances 370,485 243 3,660,092 150

Total liabilities, deferred inflows of resourcesand fund balances 760,629$ 243$ 3,708,519$ 7,593$

continued…

Special Revenue

117



AssetsCashEquity in pooled cash and investmentsInvestments, at fair valueReceivables:

TaxesAccountsSpecial assessments Accrued interest and dividendsLoans

Due from other governments

Total assets

LiabilitiesAccounts payableAccrued liabilitiesDue to other fundsDeposits payable

Total liabilities

Deferred inflows of resourcesUnavailable revenue

Fund balancesNonspendableRestricted for:

Debt serviceCulture and recreationRoad maintenance and repairsLaw enforcementOther purposes

Committed for:Culture and recreationOther purposes

Assigned to capital projects

Total fund balances

Total liabilities, deferred inflows of resourcesand fund balances

Open SpaceMajor Local Court & ParklandStreets Streets Facilities Preservation

-$ -$ -$ -$ 13,414,858 4,723,141 16,206 10,519,578

- - - -

- - - 625 77,887 - - -

- - - - - - - - - - - -

1,277,098 370,698 - -

14,769,843$ 5,093,839$ 16,206$ 10,520,203$

269,294$ 62,020$ -$ 36,870$ 108,552 36,555 - 2,547

- - - - 1,025,460 - - -

1,403,306 98,575 - 39,417

- - - -

- - - -

- - - - - - - 10,480,786

13,366,537 4,995,264 - - - - 16,206 - - - - -

- - - - - - - - - - - -

13,366,537 4,995,264 16,206 10,480,786

14,769,843$ 5,093,839$ 16,206$ 10,520,203$

continued…

Special Revenue

118






Total assets


Total liabilities






Total fund balances


FederalEquitable

Construction Drug SharingBandemer Code Enforcement Forfeiture

-$ -$ -$ -$ 56,490 3,990,324 127,601 107,097

- - - -

- - - - 1,150 10,050 - -

- - - - - - - - - - - - - - - -

57,640$ 4,000,374$ 127,601$ 107,097$

-$ 97,155$ 4,131$ 43,696$ - 68,547 - - - - - - - - - -

- 165,702 4,131 43,696

- - - -

- - - -

- - - - - - - - - - - - - - 123,470 63,401 - - - -

57,640 - - - - 3,834,672 - - - - - -

57,640 3,834,672 123,470 63,401

57,640$ 4,000,374$ 127,601$ 107,097$

continued…

Special Revenue

119






Total assets


Total liabilities






Total fund balances


ParksMemorial & Metro Special Open SpaceContribution Expansion Assistance Endowment

-$ -$ -$ -$ 975,076 1,625,200 8,526 726,785

- - - -

- - - - - - 877 - - - - - - - - - - - - - - 403,366 - -

975,076$ 2,028,566$ 9,403$ 726,785$

9,602$ 5,887$ 4,000$ -$ - 3,487 - - - - - - - - - -

9,602 9,374 4,000 -

- - - -

- - - -

- - - - 965,474 - - 726,785

- 2,019,192 - - - - - - - - - -

- - - - - - 5,403 - - - - -

965,474 2,019,192 5,403 726,785

975,076$ 2,028,566$ 9,403$ 726,785$

continued…

Special Revenue

120






Total assets


Total liabilities






Total fund balances


Cemetery Art inPolice and Perpetual Public AlternativeFire Relief Care Places Transportation

-$ -$ -$ -$ 696,325 96,672 184,729 341,519 61,810 - - -

- - - - - - - - - - - 35,950 - - - - - - - - - - - -

758,135$ 96,672$ 184,729$ 377,469$

-$ -$ 13,000$ 16,350$ - - - 4,845 - - - - - - - -

- - 13,000 21,195

- - - 36,556

- - - -

- - - - - - 171,729 - - - - -

758,135 - - - - - - -

- - - - - 96,672 - 319,718 - - - -

758,135 96,672 171,729 319,718

758,135$ 96,672$ 184,729$ 377,469$

continued…

Special Revenue

121






Total assets


Total liabilities






Total fund balances


Debt Service

ParksMichigan Maint & GeneralJustice Capital Imp Major DebtTraining Millage Grants Service

-$ -$ -$ -$ 14,339 3,738,460 632,040 443,922

- - - -

- 455 - - - - 1,278 - - - - - - - - - - - - - - - 380,904 -

14,339$ 3,738,915$ 1,014,222$ 443,922$

-$ 255,552$ 227,356$ -$ - 100,500 11,139 - - - - - - - - -

- 356,052 238,495 -

- - 1,818 -

- - - -

- - - 443,922 - 3,382,863 - - - - - -

14,339 - - - - - 773,909 -

- - - - - - - - - - - -

14,339 3,382,863 773,909 443,922

14,339$ 3,738,915$ 1,014,222$ 443,922$

continued…

Special Revenue

122






Total assets


Total liabilities






Total fund balances


Debt Service

Special GeneralAssessment Maintenance Municipal Capital

Bonds Facility Center Improvements

-$ -$ -$ -$ 643,318 1,667,182 - 4,253,851

- - - -

- - - 19,835 - - - 17,656

5,748 - - - - - - - - - - - - - - -

649,066$ 1,667,182$ -$ 4,291,342$

-$ 690$ -$ 118,912$ - 2,473 - 3,521 - - - - - - - -

- 3,163 - 122,433

5,748 - - -

- - - -

643,318 - - - - - - - - - - - - - - - - - - -

- - - - - - - - - 1,664,019 - 4,168,909

643,318 1,664,019 - 4,168,909

649,066$ 1,667,182$ -$ 4,291,342$

continued…

Capital Projects

123






Total assets


Total liabilities






Total fund balances


Permanent

ElizabethR. DeanTrust Total

-$ 56,148$ 152,291 52,535,200

2,031,449 2,093,259

- 20,915 - 679,010 - 486,081

6,424 6,424 - 19,078 - 2,439,659

2,190,164$ 58,335,774$

623$ 1,169,675$ - 386,149 - 5,178 - 1,025,460

623 2,586,462

- 436,438

1,984,000 1,984,000

- 1,087,240 205,541 15,933,178

- 20,380,993 - 975,944 - 4,534,001

- 57,640 - 4,526,950 - 5,832,928

2,189,541 55,312,874

2,190,164$ 58,335,774$

concluded.

124


Nonmajor Governmental FundsFor the Year Ended June 30, 2016

Local Law Community HomelandEnergy Enforcement Television SecurityProjects Block Grant Network Grant

RevenuesTaxes 642$ -$ -$ -$ Licenses, permits and registration - - 2,255,389 - Federal grants - 18,606 - 46,739 State shared revenues and grants - - - - Charges for services 62,236 - - - Fines and forfeits - - - - Investment income (loss) 23,166 6 41,846 76 Contributions and donations - - - - Intergovernmental revenue - - - - Other revenues 10,158 - 1,270 -

Total revenues 96,202 18,612 2,298,505 46,815


General government 45,531 - 1,752,891 - Public safety - 18,606 - 46,739 Public works - - - - Community and economic development - - - - Culture and recreation - - - -

Capital outlay - - 18,416 - Debt service:

Principal retirement - - - - Interest and fiscal charges - - - -

Total expenditures 45,531 18,606 1,771,307 46,739

Revenues over (under) expenditures 50,671 6 527,198 76

Other financing sources (uses)Transfers in 6,228 - 79,056 - Transfers out (72,639) - (2,500,000) - Issuance of debt - - - - Payment to escrow agent - - - - Bond premium - - - -

Total other financing sources (uses) (66,411) - (2,420,944) -

Net change in fund balances (15,740) 6 (1,893,746) 76

Fund balances, beginning of year 386,225 237 5,553,838 74

Fund balances, end of year 370,485$ 243$ 3,660,092$ 150$

continued…

Combining Statement of Revenues, Expenditures and Changes in Fund Balances

Special Revenue

125



Open SpaceMajor Local Court & Parkland

Streets Streets Facilities PreservationRevenues

Taxes -$ -$ -$ 2,338,322$ Licenses, permits and registration 770 - - - Federal grants 26,519 - - - State shared revenues and grants 7,395,255 2,087,073 - - Charges for services 782,318 184,932 - - Fines and forfeits - - 104,526 - Investment income (loss) 118,343 42,956 100 109,542 Contributions and donations 1,835 - - - Intergovernmental revenue 255,807 - - - Other revenues 34,527 - - 280

Total revenues 8,615,374 2,314,961 104,626 2,448,144


General government - - - - Public safety - - - - Public works 6,544,241 1,462,016 - - Community and economic development - - - - Culture and recreation - - - 298,179

Capital outlay - - - 34,150 Debt service:


Total expenditures 6,544,241 1,462,016 - 332,329

Revenues over (under) expenditures 2,071,133 852,945 104,626 2,115,815

Other financing sources (uses)Transfers in 564,795 147,876 136,576 2,220 Transfers out (910,527) (147,158) (225,000) (878,603) Issuance of debt - - - - Payment to escrow agent - - - - Bond premium - - - -

Total other financing sources (uses) (345,732) 718 (88,424) (876,383)

Net change in fund balances 1,725,401 853,663 16,202 1,239,432

Fund balances, beginning of year 11,641,136 4,141,601 4 9,241,354

Fund balances, end of year 13,366,537$ 4,995,264$ 16,206$ 10,480,786$

continued…


Special Revenue

126



FederalEquitable

Construction Drug SharingBandemer Code Enforcement Forfeiture

RevenuesTaxes -$ -$ -$ -$ Licenses, permits and registration - 3,660,912 - - Federal grants - - - - State shared revenues and grants - - - - Charges for services - - - - Fines and forfeits - - 44,993 143,460 Investment income (loss) 762 38,177 1,211 1,023 Contributions and donations - - - - Intergovernmental revenue - - - - Other revenues 6,900 1,901 - -

Total revenues 7,662 3,700,990 46,204 144,483


General government - - - - Public safety - 3,202,712 71,496 147,873 Public works - - - - Community and economic development - - - - Culture and recreation 719 - - -

Capital outlay 72,546 45,086 - - Debt service:


Total expenditures 73,265 3,247,798 71,496 147,873

Revenues over (under) expenditures (65,603) 453,192 (25,292) (3,390)

Other financing sources (uses)Transfers in - 131,424 - - Transfers out - - - - Issuance of debt - - - - Payment to escrow agent - - - - Bond premium - - - -

Total other financing sources (uses) - 131,424 - -

Net change in fund balances (65,603) 584,616 (25,292) (3,390)

Fund balances, beginning of year 123,243 3,250,056 148,762 66,791

Fund balances, end of year 57,640$ 3,834,672$ 123,470$ 63,401$

continued…


Special Revenue

127



ParksMemorial & Metro Special Open Space

Contributions Expansion Assistance EndowmentRevenues

Taxes -$ -$ -$ -$ Licenses, permits and registration - - - - Federal grants - - - - State shared revenues and grants - 403,366 - - Charges for services - - - - Fines and forfeits - - - - Investment income (loss) 10,108 17,324 60 7,373 Contributions and donations 135,394 - 5,686 - Intergovernmental revenue - - - - Other revenues - - - -

Total revenues 145,502 420,690 5,746 7,373


General government - - - - Public safety - - - - Public works - 191,514 - - Community and economic development - - 3,999 - Culture and recreation 15,811 - - 3,408

Capital outlay 68,670 - - - Debt service:


Total expenditures 84,481 191,514 3,999 3,408

Revenues over (under) expenditures 61,021 229,176 1,747 3,965

Other financing sources (uses)Transfers in 396 6,168 - 23,867 Transfers out (11,450) - - - Issuance of debt - - - - Payment to escrow agent - - - - Bond premium - - - -

Total other financing sources (uses) (11,054) 6,168 - 23,867

Net change in fund balances 49,967 235,344 1,747 27,832



continued…


Special Revenue

128



Cemetery Art inPolice and Perpetual Public AlternativeFire Relief Care Places Transportation

RevenuesTaxes -$ -$ -$ 39$ Licenses, permits and registration - - - - Federal grants - - - - State shared revenues and grants - - - - Charges for services - 10,650 - - Fines and forfeits - - - - Investment income (loss) 7,042 765 2,535 2,791 Contributions and donations - - 36,000 - Intergovernmental revenue - - - - Other revenues - - - -

Total revenues 7,042 11,415 38,535 2,830


General government - - - 19,452 Public safety - - - - Public works - - 1,815 247,943 Community and economic development - - - - Culture and recreation - - - -

Capital outlay - - 282,968 - Debt service:


Total expenditures - - 284,783 267,395

Revenues over (under) expenditures 7,042 11,415 (246,248) (264,565)

Other financing sources (uses)Transfers in - - - 348,565 Transfers out - - - - Issuance of debt - - - - Payment to escrow agent - - - - Bond premium - - - -

Total other financing sources (uses) - - - 348,565

Net change in fund balances 7,042 11,415 (246,248) 84,000

Fund balances, beginning of year 751,093 85,257 417,977 235,718

Fund balances, end of year 758,135$ 96,672$ 171,729$ 319,718$

continued…


Special Revenue

129



DebtService

ParksMichigan Maint. & GeneralJustice Capital Impr. Major DebtTraining Millage Grants Service

RevenuesTaxes -$ 5,383,283$ -$ 2,340$ Licenses, permits and registration - - - - Federal grants - - 799,055 - State shared revenues and grants 23,471 - 434,439 - Charges for services - 175,000 - 4,279,815 Fines and forfeits - - - - Investment income (loss) 48 49,898 4,124 (4,833) Contributions and donations - 129,000 25,332 - Intergovernmental revenue - - - - Other revenues - 48,297 46,302 3,331

Total revenues 23,519 5,785,478 1,309,252 4,280,653


General government - - 530,517 - Public safety 20,000 - 52,037 - Public works - - 254,698 - Community and economic development - - - - Culture and recreation - 4,000,891 98,090 -

Capital outlay - 1,259,434 347,777 - Debt service:

Principal retirement - - - 4,128,000 Interest and fiscal charges - - - 4,078,652

Total expenditures 20,000 5,260,325 1,283,119 8,206,652

Revenues over (under) expenditures 3,519 525,153 26,133 (3,925,999)

Other financing sources (uses)Transfers in - 336,668 22,256 4,245,822 Transfers out - (15,000) (53,552) - Issuance of debt - - - 17,710,000 Payment to escrow agent - - - (18,439,571) Bond premium - - - 416,162

Total other financing sources (uses) - 321,668 (31,296) 3,932,413

Net change in fund balances 3,519 846,821 (5,163) 6,414



continued…

Special Revenue


130



Debt Service

Special GeneralAssessment Maintenance Municipal Capital

Bonds Facility Center ImprovementsRevenues

Taxes 237$ -$ -$ -$ Licenses, permits and registration - - - - Federal grants - - - - State shared revenues and grants - - - - Charges for services - - - - Fines and forfeits - - - - Investment income (loss) 6,922 17,377 124 28,824 Contributions and donations - - - - Intergovernmental revenue - - - - Other revenues - - - 44,890

Total revenues 7,159 17,377 124 73,714


General government - - - 124,857 Public safety - - - - Public works - - - 176,157 Community and economic development - - - - Culture and recreation - - - -

Capital outlay - 63,767 - 605,028 Debt service:

Principal retirement 20,000 - - - Interest and fiscal charges 1,852 - - -

Total expenditures 21,852 63,767 - 906,042

Revenues over (under) expenditures (14,693) (46,390) 124 (832,328)

Other financing sources (uses)Transfers in - - - 4,246,000 Transfers out (27,625) - (177,253) - Issuance of debt - - - - Payment to escrow agent - - - - Bond premium - - - -

Total other financing sources (uses) (27,625) - (177,253) 4,246,000

Net change in fund balances (42,318) (46,390) (177,129) 3,413,672


Fund balances, end of year 643,318$ 1,664,019$ -$ 4,168,909$

continued…

Capital Projects


131



Permanent

ElizabethR. DeanTrust Total

RevenuesTaxes -$ 7,724,863$ Licenses, permits and registration - 5,917,071 Federal grants - 890,919 State shared revenues and grants - 10,343,604 Charges for services - 5,494,951 Fines and forfeits - 292,979 Investment income (loss) 58,693 586,383 Contributions and donations - 333,247 Intergovernmental revenue - 255,807 Other revenues 13,554 211,410

Total revenues 72,247 32,051,234


General government - 2,473,248 Public safety - 3,559,463 Public works - 8,878,384 Community and economic development - 3,999 Culture and recreation 12,855 4,429,953

Capital outlay - 2,797,842 Debt service:

Principal retirement - 4,148,000 Interest and fiscal charges - 4,080,504

Total expenditures 12,855 30,371,393

Revenues over (under) expenditures 59,392 1,679,841

Other financing sources (uses)Transfers in 1,800 10,299,717 Transfers out - (5,018,807) Issuance of debt - 17,710,000 Payment to escrow agent - (18,439,571) Bond premium - 416,162

Total other financing sources (uses) 1,800 4,967,501

Net change in fund balances 61,192 6,647,342

Fund balances, beginning of year 2,128,349 48,665,532

Fund balances, end of year 2,189,541$ 55,312,874$

concluded.


132


Schedule of Revenues, Expenditures and Changes inFund BalancesBudget and Actual - Nonmajor Special Revenue FundsFor the Year Ended June 30, 2016

Energy Projects

Actual OverFinal (Under) Final

Budget Actual BudgetRevenues

Taxes -$ 642$ 642$ Licenses, permits and registration - - - Federal grants - - - State shared revenues and grants - - - Charges for services 75,511 62,236 (13,275) Fines and forfeits - - - Investment income (loss) 5,943 23,166 17,223 Contributions and donations - - - Intergovernmental revenue - - - Other revenues 6,802 10,158 3,356

Total revenues 88,256 96,202 7,946


General government 184,353 45,531 (138,822) Public safety - - - Public works - - - Community and economic development - - - Culture and recreation - - -

Capital outlay - - - Debt service:

Principal retirement - - - Interest and fiscal charges - - -

Total expenditures 184,353 45,531 (138,822)

Revenues over (under) expenditures (96,097) 50,671 146,768

Other financing sources (uses)Transfers in 6,221 6,228 7 Transfers out (76,443) (72,639) (3,804)

Total other financing sources (uses) (70,222) (66,411) 3,811

Net change in fund balances (166,319) (15,740) 150,579

Fund balances, beginning of year 386,225 386,225 -

Fund balances, end of year 219,906$ 370,485$ 150,579$

continued…

133



RevenuesTaxes Licenses, permits and registrationFederal grantsState shared revenues and grantsCharges for servicesFines and forfeitsInvestment income (loss)Contributions and donationsIntergovernmental revenueOther revenues

Total revenues


General governmentPublic safetyPublic worksCommunity and economic developmentCulture and recreation

Capital outlayDebt service:

Principal retirementInterest and fiscal charges

Total expenditures

Revenues over (under) expenditures

Other financing sources (uses)Transfers inTransfers out

Total other financing sources (uses)

Net change in fund balances

Fund balances, beginning of year

Fund balances, end of year

Local Law Enforcement Block Grant


Budget Actual Budget

-$ -$ -$ - - -

18,606 18,606 - - - - - - - - - - - 6 6 - - - - - - - - -

18,606 18,612 6

- - - 18,606 18,606 -

- - - - - - - - - - - -

- - - - - -

18,606 18,606 -

- 6 6

- - - - - -

- - -

- 6 6

237 237 -

237$ 243$ 6$

continued…

134




Total revenues





Total expenditures







Community Television Network



-$ -$ -$ 1,964,000 2,255,389 291,389

- - - - - - - - - - - -

48,679 41,846 (6,833) - - - - - -

1,000 1,270 270

2,013,679 2,298,505 284,826

1,754,507 1,752,891 (1,616) - - - - - - - - - - - -

250,000 18,416 (231,584)

- - - - - -

2,004,507 1,771,307 (233,200)

9,172 527,198 518,026

79,057 79,056 (1) (2,500,000) (2,500,000) -

(2,420,943) (2,420,944) (1)

(2,411,771) (1,893,746) 518,025

5,553,838 5,553,838 -

3,142,067$ 3,660,092$ 518,025$

continued…

135




Total revenues





Total expenditures







Homeland Security Grant



-$ -$ -$ - - -

60,947 46,739 (14,208) - - - - - - - - - - 76 76 - - - - - - - - -

60,947 46,815 (14,132)

- - - 50,476 46,739 (3,737)

- - - - - - - - - - - -

- - - - - -

50,476 46,739 (3,737)

10,471 76 (10,395)

- - - - - -

- - -

10,471 76 (10,395)

74 74 -

10,545$ 150$ (10,395)$

continued…

136




Total revenues





Total expenditures







Major Streets



-$ -$ -$ - 770 770

76,954 26,519 (50,435) 6,711,071 7,395,255 684,184

818,875 782,318 (36,557) - - -

107,608 118,343 10,735 - 1,835 1,835

230,000 255,807 25,807 20,000 34,527 14,527

7,964,508 8,615,374 650,866

- - - - - -

7,401,601 6,544,241 (857,360) - - - - - - - - -

- - - - - -

7,401,601 6,544,241 (857,360)

562,907 2,071,133 1,508,226

563,998 564,795 797 (910,535) (910,527) (8)

(346,537) (345,732) 805

216,370 1,725,401 1,509,031

11,641,136 11,641,136 -

11,857,506$ 13,366,537$ 1,509,031$

continued…

137




Total revenues





Total expenditures







Local Streets



-$ -$ -$ - - - - - -

1,915,586 2,087,073 171,487 196,694 184,932 (11,762)

- - - 37,429 42,956 5,527

- - - - - -

1,000 - (1,000)

2,150,709 2,314,961 164,252

- - - - - -

2,061,369 1,462,016 (599,353) - - - - - -

260,271 - (260,271)

- - - - - -

2,321,640 1,462,016 (859,624)

(170,931) 852,945 1,023,876

147,878 147,876 (2) (147,173) (147,158) (15)

705 718 13

(170,226) 853,663 1,023,889

4,141,601 4,141,601 -

3,971,375$ 4,995,264$ 1,023,889$

continued…

138




Total revenues





Total expenditures







Court Facilities



-$ -$ -$ - - - - - - - - - - - -

125,000 104,526 (20,474) - 100 100 - - - - - - - - -

125,000 104,626 (20,374)

- - - - - - - - - - - - - - - - - -

- - - - - -

- - -

125,000 104,626 (20,374)

100,000 136,576 36,576 (225,000) (225,000) -

(125,000) (88,424) 36,576

- 16,202 16,202

4 4 -

4$ 16,206$ 16,202$

continued…

139




Total revenues





Total expenditures







Open Space & Parkland Preservation



2,340,842$ 2,338,322$ (2,520)$ - - - - - - - - - - - - - - -

102,004 109,542 7,538 - - - - - - - 280 280

2,442,846 2,448,144 5,298

- - - - - - - - - - - -

194,199 298,179 103,980 151,870 34,150 (117,720)

- - - - - -

346,069 332,329 (13,740)

2,096,777 2,115,815 19,038

2,218 2,220 2 (1,266,543) (878,603) (387,940)

(1,264,325) (876,383) 387,942

832,452 1,239,432 406,980

9,241,354 9,241,354 -

10,073,806$ 10,480,786$ 406,980$

continued…

140




Total revenues





Total expenditures







Bandemer



-$ -$ -$ - - - - - - - - - - - - - - -

1,229 762 (467) - - - - - -

6,900 6,900 -

8,129 7,662 (467)

- - - - - - - - - - - -

716 719 3 72,551 72,546 (5)

- - - - - -

73,267 73,265 (2)

(65,138) (65,603) (465)

- - - - - -

- - -

(65,138) (65,603) (465)

123,243 123,243 -

58,105$ 57,640$ (465)$

continued…

141




Total revenues





Total expenditures







Construction Code



-$ -$ -$ 2,758,000 3,660,912 902,912

- - - - - - - - - - - -

39,429 38,177 (1,252) - - - - - - - 1,901 1,901

2,797,429 3,700,990 903,561

- - - 3,508,674 3,202,712 (305,962)

- - - - - - - - -

42,086 45,086 3,000

- - - - - -

3,550,760 3,247,798 (302,962)

(753,331) 453,192 1,206,523

131,417 131,424 7 - - -

131,417 131,424 7

(621,914) 584,616 1,206,530

3,250,056 3,250,056 -

2,628,142$ 3,834,672$ 1,206,530$

continued…

142




Total revenues





Total expenditures







Drug Enforcement



-$ -$ -$ - - - - - - - - - - - -

44,994 44,993 (1) - 1,211 1,211 - - - - - - - - -

44,994 46,204 1,210

- - - 174,994 71,496 (103,498)

- - - - - - - - - - - -

- - - - - -

174,994 71,496 (103,498)

(130,000) (25,292) 104,708

- - - - - -

- - -

(130,000) (25,292) 104,708

148,762 148,762 -

18,762$ 123,470$ 104,708$

continued…

143




Total revenues





Total expenditures







Federal Equitable Sharing Forfeiture



-$ -$ -$ - - - - - - - - - - - -

139,070 143,460 4,390 - 1,023 1,023 - - - - - - - - -

139,070 144,483 5,413

- - - 187,070 147,873 (39,197)

- - - - - - - - - - - -

- - - - - -

187,070 147,873 (39,197)

(48,000) (3,390) 44,610

- - - - - -

- - -

(48,000) (3,390) 44,610

66,791 66,791 -

18,791$ 63,401$ 44,610$

continued…

144




Total revenues





Total expenditures







Parks & Memorial Contributions



-$ -$ -$ - - - - - - - - - - - - - - -

9,591 10,108 517 136,020 135,394 (626)

- - - - - -

145,611 145,502 (109)

- - - - - - - - - - - -

27,572 15,811 (11,761) 68,670 68,670 -

- - - - - -

96,242 84,481 (11,761)

49,369 61,021 11,652

391 396 5 (15,000) (11,450) (3,550)

(14,609) (11,054) 3,555

34,760 49,967 15,207

915,507 915,507 -

950,267$ 965,474$ 15,207$

continued…

145




Total revenues





Total expenditures







Metro Expansion



-$ -$ -$ - - - - - -

337,000 403,366 66,366 - - - - - -

16,042 17,324 1,282 - - - - - - - - -

353,042 420,690 67,648

- - - - - -

353,724 191,514 (162,210) - - - - - - - - -

- - - - - -

353,724 191,514 (162,210)

(682) 229,176 229,858

6,169 6,168 (1) - - -

6,169 6,168 (1)

5,487 235,344 229,857

1,783,848 1,783,848 -

1,789,335$ 2,019,192$ 229,857$

continued…

146




Total revenues





Total expenditures







Special Assistance



-$ -$ -$ - - - - - - - - - - - - - - - - 60 60

4,000 5,686 1,686 - - - - - -

4,000 5,746 1,746

- - - - - - - - -

4,000 3,999 (1) - - - - - -

- - - - - -

4,000 3,999 (1)

- 1,747 1,747

- - - - - -

- - -

- 1,747 1,747

3,656 3,656 -

3,656$ 5,403$ 1,747$

continued…

147




Total revenues





Total expenditures







Open Space Endowment



-$ -$ -$ - - - - - - - - - - - - - - -

4,500 7,373 2,873 - - - - - - - - -

4,500 7,373 2,873

- - - - - - - - - - - -

10,000 3,408 (6,592) - - -

- - - - - -

10,000 3,408 (6,592)

(5,500) 3,965 9,465

- 23,867 23,867 - - -

- 23,867 23,867

(5,500) 27,832 33,332

698,953 698,953 -

693,453$ 726,785$ 33,332$

continued…

148




Total revenues





Total expenditures







Police and Fire Relief



-$ -$ -$ - - - - - - - - - - - - - - -

3,000 7,042 4,042 - - - - - - - - -

3,000 7,042 4,042

- - - - - - - - - - - - - - - - - -

- - - - - -

- - -

3,000 7,042 4,042

- - - - - -

- - -

3,000 7,042 4,042

751,093 751,093 -

754,093$ 758,135$ 4,042$

continued…

149




Total revenues





Total expenditures







Cemetery Perpetual Care



-$ -$ -$ - - - - - - - - - - 10,650 10,650 - - -

800 765 (35) - - - - - - - - -

800 11,415 10,615

- - - - - - - - - - - - - - - - - -

- - - - - -

- - -

800 11,415 10,615

- - - - - -

- - -

800 11,415 10,615

85,257 85,257 -

86,057$ 96,672$ 10,615$

continued…

150




Total revenues





Total expenditures







Art in Public Places



-$ -$ -$ - - - - - - - - - - - - - - - - 2,535 2,535

36,000 36,000 - - - - - - -

36,000 38,535 2,535

- - - - - -

1,815 1,815 - - - - - - -

282,971 282,968 (3)

- - - - - -

284,786 284,783 (3)

(248,786) (246,248) 2,538

- - - - - -

- - -

(248,786) (246,248) 2,538

417,977 417,977 -

169,191$ 171,729$ 2,538$

continued…

151




Total revenues





Total expenditures







Alternative Transportation



-$ 39$ 39$ - - - - - - - - - - - - - - -

2,505 2,791 286 - - - - - - - - -

2,505 2,830 325

19,404 19,452 48 - - -

291,934 247,943 (43,991) - - - - - - - - -

- - - - - -

311,338 267,395 (43,943)

(308,833) (264,565) 44,268

312,034 348,565 36,531 - - -

312,034 348,565 36,531

3,201 84,000 80,799

235,718 235,718 -

238,919$ 319,718$ 80,799$

continued…

152




Total revenues





Total expenditures







Michigan Justice Training



-$ -$ -$ - - - - - -

20,000 23,471 3,471 - - - - - - - 48 48 - - - - - - - - -

20,000 23,519 3,519

- - - 20,000 20,000 -

- - - - - - - - - - - -

- - - - - - -

20,000 20,000 -

- 3,519 3,519

- - - - - -

- - -

- 3,519 3,519

10,820 10,820 -

10,820$ 14,339$ 3,519$

continued…

153




Total revenues





Total expenditures







Parks Maint & Capital Improvement Millage



5,388,003$ 5,383,283$ (4,720)$ - - - - - -

300,000 - (300,000) - 175,000 175,000 - - -

50,419 49,898 (521) - 129,000 129,000 - - -

1,100 48,297 47,197

5,739,522 5,785,478 45,956

- - - - - - - - - - - -

4,960,734 4,000,891 (959,843) 945,254 1,259,434 314,180

- - - - - - -

5,905,988 5,260,325 (645,663)

(166,466) 525,153 691,619

283,120 336,668 53,548 (15,000) (15,000) -

268,120 321,668 53,548

101,654 846,821 745,167

2,536,042 2,536,042 -

2,637,696$ 3,382,863$ 745,167$

continued…

154




Total revenues





Total expenditures







Major Grants



-$ -$ -$ - - -

842,054 799,055 (42,999) 835,089 434,439 (400,650)

- - - - - - - 4,124 4,124

28,448 25,332 (3,116) - - -

98,120 46,302 (51,818)

1,803,711 1,309,252 (494,459)

706,630 530,517 (176,113) 53,685 52,037 (1,648)

254,698 254,698 - - - -

98,090 98,090 - 347,777 347,777 -

- - - - - -

1,460,880 1,283,119 (177,761)

342,831 26,133 (316,698)

22,256 22,256 - (53,552) (53,552) -

(31,296) (31,296) -

311,535 (5,163) (316,698)

779,072 779,072 -

1,090,607$ 773,909$ (316,698)$

concluded.

155


Combining Statement of Net PositionInternal Service FundsJune 30, 2016

Central Fleet Information ProjectStores Services Technology Management


Cash -$ -$ -$ 200$ Equity in pooled cash and investments 1,921,920 9,798,884 4,780,026 2,079,385 Accounts receivable, net 143 16,673 - 4,309 Prepaid items - - 171,718 - Inventories 549,304 396,539 - -

Total current assets 2,471,367 10,212,096 4,951,744 2,083,894

Noncurrent assets:Capital assets not depreciated - 90,005 60,235 - Capital assets being depreciated, net 20,044 7,028,227 409,922 41,604

Total noncurrent assets 20,044 7,118,232 470,157 41,604

Total assets 2,491,411 17,330,328 5,421,901 2,125,498


Accounts payable 32,901 624,790 176,398 122,865 Accrued liabilities - - 1,562 - Estimated claims payable, current - - - -

Total current liabilities 32,901 624,790 177,960 122,865

Noncurrent liabilities -Estimated claims payable, net - - - -

Total liabilities 32,901 624,790 177,960 122,865

Net positionInvested in capital assets 20,044 7,118,232 470,157 41,604 Unrestricted 2,438,466 9,587,306 4,773,784 1,961,029

Total net position 2,458,510$ 16,705,538$ 5,243,941$ 2,002,633$

continued…

156


Combining Statement of Net PositionInternal Service FundsJune 30, 2016


CashEquity in pooled cash and investmentsAccounts receivable, netPrepaid itemsInventories

Total current assets

Noncurrent assets:Capital assets not depreciatedCapital assets being depreciated, net

Total noncurrent assets

Total assets


Accounts payableAccrued liabilitiesEstimated claims payable, current

Total current liabilities

Noncurrent liabilities -Estimated claims payable, net

Total liabilities

Net positionInvested in capital assetsUnrestricted

Total net position

WheelerInsurance Center Total

-$ -$ 200$ 9,938,768 457,710 28,976,693

- 1,333 22,458 2,439,989 - 2,611,707

- - 945,843 12,378,757 459,043 32,556,901

- - 150,240 - - 7,499,797 - - 7,650,037

12,378,757 459,043 40,206,938

923,392 27,033 1,907,379 - - 1,562

1,569,930 - 1,569,930 2,493,322 27,033 3,478,871

1,282,620 - 1,282,620

3,775,942 27,033 4,761,491

- - 7,650,037 8,602,815 432,010 27,795,410

8,602,815$ 432,010$ 35,445,447$

concluded.

157


Combining Statement of Revenues, Expenses and Changes in FundNet PositionInternal Service FundsFor the Year Ended June 30, 2016

Central Fleet Information ProjectStores Services Technology Management

Operating revenuesCharges for services 1,177,923$ 7,808,613$ 6,879,935$ 3,194,400$

Operating expensesPersonal services 278,077 1,598,575 3,423,611 2,155,822 Municipal service charge 36,456 168,276 679,608 101,388 Information technology charges 35,304 67,920 259,032 322,756 Other operating costs 710,255 2,189,160 2,329,209 300,585 Depreciation 10,417 2,259,710 389,670 18,710

Total operating expenses 1,070,509 6,283,641 7,081,130 2,899,261

Operating income 107,414 1,524,972 (201,195) 295,139

Nonoperating revenuesInvestment income 18,320 96,805 50,015 36,279 Gain on sale of capital assets - 290,724 - -

Total nonoperating revenues 18,320 387,529 50,015 36,279

Income before contributions and transfers 125,734 1,912,501 (151,180) 331,418

Capital contributions - 589,813 - -

Transfers in 21,996 95,916 171,852 106,464

Transfers out (47,772) (2,683,902) (15,892) (4,538,052)

Changes in net position 99,958 (85,672) 4,780 (4,100,170)

Net position, beginning of year 2,358,552 16,791,210 5,239,161 6,102,803

Net position, end of year 2,458,510$ 16,705,538$ 5,243,941$ 2,002,633$

continued…

158


Combining Statement of Revenues, Expenses and Changes in FundNet PositionInternal Service FundsFor the Year Ended June 30, 2016

Operating revenuesCharges for services

Operating expensesPersonal servicesMunicipal service chargeInformation technology chargesOther operating costsDepreciation

Total operating expenses

Operating income

Nonoperating revenuesInvestment incomeGain on sale of capital assets

Total nonoperating revenues

Income before contributions and transfers

Capital contributions

Transfers in

Transfers out

Changes in net position

Net position, beginning of year

Net position, end of year

Wheeler Insurance Center Total

27,154,131$ 449,310$ 46,664,312$

631,619 50,491 8,138,195 379,896 18,468 1,384,092 18,240 773 704,025

24,552,019 318,155 30,399,383 - - 2,678,507

25,581,774 387,887 43,304,202

1,572,357 61,423 3,360,110

161,675 4,685 367,779 - - 290,724

161,675 4,685 658,503

1,734,032 66,108 4,018,613

- - 589,813

- 3,744 399,972

(4,989,324) - (12,274,942)

(3,255,292) 69,852 (7,266,544)

11,858,107 362,158 42,711,991

8,602,815$ 432,010$ 35,445,447$

concluded.

159


Combining Statement of Cash FlowsInternal Service FundsFor the Year Ended June 30, 2016

Central Fleet Information Project Stores Services Technology Management

Cash flow from operating activitiesPayments to suppliers (678,256)$ (1,988,651)$ (3,421,197)$ (640,539)$ Payments on behalf of employees (278,076) (1,598,579) (3,422,048) (2,155,823) Payments received for interfund services 1,177,780 7,795,092 6,889,101 3,227,029

Net cash provided by operating activities 221,448 4,207,862 45,856 430,667

Cash flows from noncapital financing activitiesTransfers in 21,996 95,916 171,852 106,464 Transfers out (47,772) (2,683,902) (15,892) (4,538,052)

Net cash flows provided by (used in) noncapitalfinancing activities (25,776) (2,587,986) 155,960 (4,431,588)

Cash flows from capital and related financing activitiesAcquisition of capital assets - (2,293,443) (142,101) (10,960) Proceeds from sale of equipment - 396,255 - -

Net cash flows used in capital andrelated financing activities - (1,897,188) (142,101) (10,960)

Cash flows from investing activitiesInterest and dividends on investments 18,320 96,805 50,015 36,279

Net change in cash and cash equivalents 213,992 (180,507) 109,730 (3,975,602)

Cash and cash equivalents, beginning of the year 1,707,928 9,979,391 4,670,296 6,055,187

Cash and cash equivalents, end of the year 1,921,920$ 9,798,884$ 4,780,026$ 2,079,585$

Reconciliation to statement of net positionCash -$ -$ -$ 200$ Equity in pooled cash and investments 1,921,920 9,798,884 4,780,026 2,079,385

Cash and cash equivalent, end of year 1,921,920$ 9,798,884$ 4,780,026$ 2,079,585$

continued…

160



Cash flow from operating activitiesPayments to suppliersPayments on behalf of employeesPayments received for interfund services

Net cash provided by operating activities

Cash flows from noncapital financing activitiesTransfers inTransfers out

Net cash flows provided by (used in) noncapitalfinancing activities

Cash flows from capital and related financing activitiesAcquisition of capital assetsProceeds from sale of equipment

Net cash flows used in capital andrelated financing activities

Cash flows from investing activitiesInterest and dividends on investments




Reconciliation to statement of net positionCashEquity in pooled cash and investments



(26,560,534)$ (347,403)$ (33,636,580)$ (631,621) (50,488) (8,136,635)

27,154,131 447,990 46,691,123

(38,024) 50,099 4,917,908

- 3,744 399,972 (4,989,324) - (12,274,942)

(4,989,324) 3,744 (11,874,970)

- - (2,446,504) - - 396,255

- - (2,050,249)

161,675 4,685 367,779

(4,865,673) 58,528 (8,639,532)

14,804,441 399,182 37,616,425

9,938,768$ 457,710$ 28,976,893$

-$ -$ 200$ 9,938,768 457,710 28,976,693

9,938,768$ 457,710$ 28,976,893$

continued…

161



Central Fleet Information Project Stores Services Technology Management

Reconciliation of operating income to net cashprovided by operating activities

Operating income 107,414$ 1,524,972$ (201,195)$ 295,139$ Adjustments to reconcile operating incometo net cash provided by operating activities:

Depreciation 10,417 2,259,710 389,670 18,710 Changes in assets and liabilities:

Accounts receivable (220) (13,524) 9,166 35,207 Allowance for uncollectible accounts 77 - - (2,576) Prepaid items - - (98,632) - Inventories 108,905 8,649 - - Accounts payable (5,144) 428,055 (54,715) 84,187 Accrued liabilities (1) - 1,562 - Estimated claims payable - - - -

Net cash provided by operating activities 221,448$ 4,207,862$ 45,856$ 430,667$

continued…

162



Reconciliation of operating income to net cashprovided by operating activities

Operating incomeAdjustments to reconcile operating incometo net cash provided by operating activities:

Depreciation Changes in assets and liabilities:

Accounts receivableAllowance for uncollectible accountsPrepaid itemsInventoriesAccounts payableAccrued liabilitiesEstimated claims payable

Net cash provided by operating activities


1,572,357$ 61,423$ 3,360,110$

- - 2,678,507

- (1,358) 29,271 - 37 (2,462)

(251,434) - (350,066) - - 117,554

69,485 (10,003) 511,865 - - 1,561

(1,428,432) - (1,428,432)

(38,024)$ 50,099$ 4,917,908$

concluded.

163


Combining Statement of Fiduciary Net PositionPension and Other Employee Benefits Trust FundsJune 30, 2016

Employees' RetireeRetirement Health Care

System Trust Fund TotalAssets

Equity in pooled cash and investments 37,470$ 2,919,003$ 2,956,473$ Investments, at fair value:

Equities 242,726,673 72,154,266 314,880,939 Fixed income 156,764,195 47,044,138 203,808,333 Other 60,047,469 14,748,331 74,795,800

Accrued interest and dividends 497,321 261,762 759,083 Due from broker for securities sold 104,984 132,650 237,634 Capital assets (net of depreciation of $112,093) 373,957 - 373,957

Total assets 460,552,069 137,260,150 597,812,219

Deferred outflows of resourcesDeferred pension amounts 416,214 - 416,214

LiabilitiesAccounts payable 3,048,647 - 3,048,647 Accrued liabilities - 127,953 127,953 Due to broker for securities purchased 414,955 348,536 763,491 Mortgage payable, due in one year 27,369 - 27,369 Mortgage payable, due in more than one year 192,104 - 192,104 Net pension liability 645,821 - 645,821

Total liabilities 4,328,896 476,489 4,805,385

Deferred inflows of resourcesDeferred pension amounts 19,066 - 19,066

Net positionNet investment in capital assets 154,484 - 154,484 Restricted for pensions 456,465,837 136,783,661 593,249,498

Total net position 456,620,321$ 136,783,661$ 593,403,982$

164


Combining Statement of Changes in Fiduciary Net PositionPension and Other Employee Benefit Trusts FundsFor the Year Ended June 30, 2016

Employee RetireeRetirement Health Care

System Trust Fund TotalAdditions

Investment income:From investing activities:

Appreciation (depreciation) in fair valueof investments 222,470$ (1,504,639)$ (1,282,169)$

Interest and dividends 2,920,866 2,321,825 5,242,691 Total investment income 3,143,336 817,186 3,960,522

Investment management fees (729,066) (286,554) (1,015,620) Net investment income from investing activities 2,414,270 530,632 2,944,902

From securities lending activities:Gross earnings 47,061 39,090 86,151 Borrower rebates received (paid) (11,345) 26,998 15,653 Securities lending fees (10,668) (19,722) (30,390)

Net investment income from securitieslending activities 25,048 46,366 71,414

Total net investment income 2,439,318 576,998 3,016,316

Contributions:Employer 13,352,412 15,171,011 28,523,423 Plan member 3,139,266 - 3,139,266

Total contributions 16,491,678 15,171,011 31,662,689

Total additions 18,930,996 15,748,009 34,679,005

DeductionsBenefits 32,996,136 12,095,622 45,091,758 Refund of contributions 963,896 - 963,896 Administrative expense 724,540 57,765 782,305

Total deductions 34,684,572 12,153,387 46,837,959

Change in net position (15,753,576) 3,594,622 (12,158,954)

Net position, beginning of year 472,373,897 133,189,039 605,562,936

Net position, end of year 456,620,321$ 136,783,661$ 593,403,982$

165


Combining Statement of Assets and LiabilitiesAgency FundsJune 30, 2016

Treasurer's Treasurer's 15thDelinquent Current Contractors' District

Tax Tax Retainage Court

AssetsCash -$ 27,831$ -$ 63,383$ Equity in pooled cash and investments 157,793 123,305 - -

Total assets 157,793$ 151,136$ -$ 63,383$

LiabilitiesDue to others -$ 151,136$ -$ -$ Due to other governments 157,793 - - - Deposits - - - 63,383

Total liabilities 157,793$ 151,136$ -$ 63,383$

continued…

166


Combining Statement of Assets and LiabilitiesAgency FundsJune 30, 2016

Payroll Total

AssetsCash -$ 91,214$ Equity in pooled cash and investments 19,913 301,011

Total assets 19,913$ 392,225$

LiabilitiesDue to others 19,913$ 171,049$ Due to other governments - 157,793 Deposits - 63,383

Total liabilities 19,913$ 392,225$

concluded.

167


Combining Statement of Changes in Assets and LiabilitiesAgency FundsFor the Year Ended June 30, 2016

Beginning EndingBalance Additions Deductions Balance

Treasurer's Delinquent Tax FundAssets

Equity in pooled cash and investments 88,638$ 664,516$ 595,361$ 157,793$ Due from other governments 4,305 - 4,305 -

Total assets 92,943$ 664,516$ 599,666$ 157,793$

LiabilitiesDue to others 92,943$ 1,391,705$ 1,484,648$ -$ Due to other governments - 436,284 278,491 157,793

Total liabilities 92,943$ 1,827,989$ 1,763,139$ 157,793$

Treasurer's Current Tax FundAssets

Cash 41,184$ 286,348,129$ 286,361,482$ 27,831$ Equity in pooled cash and investments 51,168 3,418,828 3,346,691 123,305

Total assets 92,352$ 289,766,957$ 289,708,173$ 151,136$

LiabilitiesDue to others 92,352$ 272,779,905$ 272,721,121$ 151,136$

Contractors' Retainage FundAssets

Equity in pooled cash and investments 7,610$ -$ 7,610$ -$

LiabilitiesDue to others 7,610$ -$ 7,610$ -

15th District Court FundAssets

Cash 137,732$ 156,991$ 231,340$ 63,383$

LiabilitiesDue to other governments 72,340$ -$ 72,340$ -$ Deposits 65,392 - 2,009 63,383

Total liabilities 137,732$ -$ 74,349$ 63,383$

continued…

168


Combining Statement of Fiduciary Assets and LiabilitiesAgency FundsFor the Year Ended June 30, 2016

Beginning EndingBalance Additions Deductions Balance

Payroll FundAssets

Cash -$ 20$ 20$ -$ Equity in pooled cash and investments 18,151 85,950,817 85,949,055 19,913

Total assets 18,151$ 85,950,837$ 85,949,075$ 19,913$

LiabilitiesDue to others 18,151$ 153,039,836$ 153,038,074$ 19,913$

Total - All Agency Funds

AssetsCash 178,916$ 286,505,140$ 286,592,842$ 91,214$ Equity in pooled cash and investments 165,567 90,034,161 89,898,717 301,011 Due from other governments 4,305 - 4,305 -

Total assets 348,788$ 376,539,301$ 376,495,864$ 392,225$

LiabilitiesDue to others 211,056$ 427,211,446$ 427,251,453$ 171,049$ Due to other governments 72,340 436,284 350,831 157,793 Deposits 65,392 - 2,009 63,383

Total liabilities 348,788$ 427,647,730$ 427,604,293$ 392,225$

concluded.

169


Component Unit Balance SheetSmartZone Local Development Finance AuthorityJune 30, 2016

SmartZoneLocal

DevelopmentFinance

Authority

AssetsEquity in pooled cash and investments 1,624,540$ Loans receivable 1,040,382

Total assets 2,664,922$

LiabilitiesAccounts payable 154,766$ Unearned revenue 1,040,382

Total liabilities 1,195,148

Fund balanceCommitted for community and economic development 1,469,774

Total liabilities and fund balance 2,664,922$

170


Component Unit Statement of Revenues, Expenditures and Changes in Fund BalanceSmartZone Local Development Finance AuthorityFor the Year Ended June 30, 2016

SmartZoneLocal

DevelopmentFinance

Authority

RevenuesTaxes 2,512,493$ Investment income 16,897

Total revenues 2,529,390

ExpendituresCurrent -

Community and economic development 2,466,473

Net change in fund balance 62,917

Fund balance, beginning of year 1,406,857

Fund balance, end of year 1,469,774$

171


172

STATISTICAL SECTION

173


174


Statistical Section Table of Contents

PageFinancial Trends These schedules contain trend information to help the

reader understand how the City's financial performanceand well-being have changed over time. 176

Revenue Capacity These schedules contain information to help the readerassess the City's most significant local revenue source, theproperty tax. 188

Debt Capacity These schedules present information to help the readerassess the affordability of the City's current levels ofoutstanding debt and the City's ability to issue additionaldebt in the future. 196

Demographic andEconomic Information

These schedules offer demographic and economicindicators to help the reader understand the environmentwithin which the City's financial activities take place. 202

Operating Information

These schedules contain information about the City'soperations and resources to help the reader understandhow the City's financial information relates to the servicesthe City provides and the activities it performs. 204

This part of the City of Ann Arbor's comprehensive annual financial report presents detailedinformation as a context for understanding what the information in the financial statements,note disclosures, and required supplementary information says about the City's overall financialhealth.

Sources: Unless otherwise noted, the information in these schedules are derived from the annualfinancial reports for the applicable year.

175

CITY OF ANN ARBOR, MICHIGAN Schedule 1UNAUDITED

Net Position by Component (Accrual Basis of Accounting)Last Ten Fiscal Years

2016 2015 2014 2013 2012Governmental activities

Net investment in capital assets 696,101,749$ 697,791,106$ 701,552,873$ 700,945,291$ 684,183,914$ Restricted 57,396,250 56,287,227 56,297,832 57,612,227 66,605,173 Unrestricted 526,826 1,632,309 41,317,182 33,838,840 23,913,683

Total governmental activities net position 754,024,825$ 755,710,642$ 799,167,887$ 792,396,358$ 774,702,770$

Business-type activitiesNet investment in capital assets 198,917,535$ 193,410,202$ 190,021,586$ 189,062,847$ 183,625,625$ Restricted 33,715,280 32,368,111 30,332,704 28,947,807 21,926,274 Unrestricted 66,341,762 61,336,547 61,806,858 47,860,799 49,549,547

Total business-type activities net position 298,974,577$ 287,114,860$ 282,161,148$ 265,871,453$ 255,101,446$

Primary governmentNet investment in capital assets 895,019,284$ 891,201,308$ 891,574,459$ 890,008,138$ 867,809,539$ Restricted 91,111,530 88,655,338 86,630,536 86,560,034 88,531,447 Unrestricted 66,868,588 62,968,856 103,124,040 81,699,639 73,463,230

Total primary government net position 1,052,999,402$ 1,042,825,502$ 1,081,329,035$ 1,058,267,811$ 1,029,804,216$

continued…

Source: City of Ann Arbor Financial Services, Accounting Services Unit

Note: In fiscal year 2015, the City adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions. Prior periods have not been restated for its impact.

176


Net Position by Component (Accrual Basis of Accounting)Last Ten Fiscal Years

2011 2010 2009 2008 2007Governmental activities

Net investment in capital assets 672,899,397$ 579,020,698$ 612,949,811$ 626,041,914$ 611,225,989$ Restricted 66,772,308 118,723,718 101,462,605 75,698,698 79,571,639 Unrestricted 15,649,176 43,955,179 10,198,885 30,524,342 25,703,229

Total governmental activities net position 755,320,881$ 741,699,595$ 724,611,301$ 732,264,954$ 716,500,857$

Business-type activitiesNet investment in capital assets 164,731,782$ 145,084,736$ 122,234,225$ 77,083,900$ 111,888,472$ Restricted 17,374,027 17,245,077 18,391,715 18,837,147 15,291,215 Unrestricted 56,356,293 59,771,622 69,899,328 101,517,578 55,985,356

Total business-type activities net position 238,462,102$ 222,101,435$ 210,525,268$ 197,438,625$ 183,165,043$

Primary governmentNet investment in capital assets 837,631,179$ 724,105,434$ 735,184,036$ 703,125,814$ 723,114,461$ Restricted 84,146,335 135,968,795 119,854,320 94,535,845 94,862,854 Unrestricted 72,005,469 103,726,801 80,098,213 132,041,920 81,688,585

Total primary government net position 993,782,983$ 963,801,030$ 935,136,569$ 929,703,579$ 899,665,900$

concluded.

177


Changes in Net Position (Accrual Basis of Accounting)Last Ten Fiscal Years

2016 2015 2014 2013 2012


General government 15,951,143$ 16,550,948$ 15,580,703$ 14,780,995$ 15,236,105$ Public safety 45,158,518 43,882,972 40,307,361 39,396,533 40,649,428 Public works 38,305,144 33,619,237 37,787,092 24,374,228 19,889,391 Community and economic development 2,925,711 2,749,048 2,031,872 1,820,460 2,931,838 Culture and recreation 12,865,261 13,374,937 12,008,899 10,573,584 10,071,912 Public transportation 10,038,406 9,735,605 9,494,422 9,233,757 8,913,232 Debt service 4,837,529 4,691,976 5,037,624 4,953,237 5,134,805 Unallocated depreciation - - - - -

Total governmental activities expenses 130,081,712 124,604,723 122,247,973 105,132,794 102,826,711

Business-type activities:Water 19,188,325 18,494,776 17,332,597 17,939,124 16,976,630 Sewer 17,880,966 16,842,294 15,201,859 15,024,567 14,569,815 Parking 2,048,444 2,144,727 2,434,729 2,537,775 2,708,673 Market - - 229,134 234,078 168,977 Golf courses - - - 1,443,008 1,554,083 Airport 670,167 746,680 676,227 670,743 568,629 Stormwater 5,616,057 5,986,171 4,269,354 4,983,006 4,336,523 Solid waste 18,301,294 12,986,803 12,848,176 14,336,494 11,563,289

Total business-type activities expenses 63,705,253 57,201,451 52,992,076 57,168,795 52,446,619

Total primary government expenses 193,786,965 181,806,174 175,240,049 162,301,589 155,273,330

continued…

178



2011 2010 2009 2008 2007


General government 14,794,159$ 17,333,282$ 24,108,111$ 14,290,184$ 15,219,894$ Public safety 42,049,504 43,010,456 56,723,757 48,004,360 42,368,701 Public works 20,468,502 17,933,743 21,084,898 22,948,985 16,388,169 Community and economic development 3,781,557 3,996,830 5,869,426 5,611,549 5,146,231 Culture and recreation 9,935,578 7,945,806 9,530,857 8,616,049 6,464,261 Public transportation 9,362,712 9,682,798 9,592,129 9,574,677 9,169,355 Debt service 5,260,736 3,297,914 3,229,523 2,544,827 2,737,333 Unallocated depreciation 44,331 141,823 39,175 64,861 55,005

Total governmental activities expenses 105,697,079 103,342,652 130,177,876 111,655,492 97,548,949

Business-type activities:Water 17,338,241 16,861,582 18,971,550 17,876,975 16,943,066 Sewer 14,443,929 14,242,272 15,190,288 13,585,023 15,247,981 Parking 2,678,011 2,879,139 3,048,960 2,963,565 2,902,894 Market 156,059 155,993 145,024 136,004 124,636 Golf courses 1,649,866 1,646,340 1,510,711 1,374,434 1,115,341 Airport 744,629 670,736 846,383 728,168 842,521 Stormwater 3,945,211 3,031,318 2,789,058 3,038,548 2,622,490 Solid waste 13,724,530 11,770,761 12,131,440 10,881,003 10,322,715

Total business-type activities expenses 54,680,476 51,258,141 54,633,414 50,583,720 50,121,644

Total primary government expenses 160,377,555 154,600,793 184,811,290 162,239,212 147,670,593

continued…

179



2016 2015 2014 2013 2012

Program revenuesGovernmental activities:

Charges for services: General government 8,691,577$ 9,296,146$ 8,612,587$ 8,557,284$ 7,371,102$ Public safety 9,026,629 8,847,862 7,783,075 8,110,028 9,559,178 Public works 4,262,035 2,662,357 2,236,913 2,620,789 3,303,537 Community and economic development - 657 293,533 - 35,269 Culture and Recreation 5,121,351 4,097,635 3,891,323 2,502,342 2,383,032 Public transportation - - - - 92,518 Interest on long-term debt 4,283,146 4,287,804 4,241,683 3,733,571 3,038,523 Operating grants and contributions 12,273,077 11,030,886 12,380,494 13,682,013 13,210,386Capital grants and contributions 638,182 865,776 974,291 493,900 346,046

Total governmental activities program revenues 44,295,997 41,089,123 40,413,899 39,699,927 39,339,591

Business-type activities:Charges for services: Water 24,053,723 22,697,619 22,725,289 23,746,197 22,017,955 Sewer 23,926,479 22,137,470 22,639,231 21,456,653 21,103,955 Parking 2,732,541 2,820,269 2,860,469 2,884,220 2,877,149 Market - - 198,989 148,942 253,850 Golf courses - - - 1,146,989 1,304,135 Airport 924,141 888,809 869,591 855,286 834,238 Stormwater 6,915,370 6,343,928 6,446,776 5,956,093 5,712,581 Solid waste 2,965,288 2,875,575 3,329,167 2,942,230 3,450,410 Capital grants and contributions 600,945 4,645,758 1,963,610 4,925,869 1,256,394

Total business-type activities program revenues 62,118,487 62,409,428 61,033,122 64,062,479 58,810,667

Total primary government program revenues 106,414,484 103,498,551 101,447,021 103,762,406 98,150,258

continued…

180



2011 2010 2009 2008 2007

Program revenuesGovernmental activities:

Charges for services: General government 11,729,555$ 8,527,479$ 5,747,883$ 5,365,601$ 4,968,702$ Public safety 8,732,273 7,272,976 11,128,662 13,042,927 12,119,252 Public works 2,253,632 3,158,923 1,552,806 2,104,180 4,224,568 Community and economic development - - - - - Culture and Recreation 2,623,518 2,372,364 2,615,433 2,561,561 2,447,072 Public transportation 93,612 97,513 98,464 91,589 91,589 Interest on long-term debt - - - - - Operating grants and contributions 9,635,060 9,998,747 10,174,646 10,635,661 10,659,938Capital grants and contributions 3,621,001 1,239,229 681,800 336,643 479,321

Total governmental activities program revenues 38,688,651 32,667,231 31,999,694 34,138,162 34,990,442

Business-type activities:Charges for services: Water 21,160,437 19,905,769 18,420,957 20,274,057 19,075,505 Sewer 21,741,717 19,292,506 19,074,478 19,493,468 17,330,738 Parking 2,923,214 2,941,159 3,423,624 2,531,021 3,305,205 Market 148,687 144,591 115,902 122,644 126,979 Golf courses 1,171,776 1,164,840 1,031,632 865,113 870,567 Airport 847,728 782,039 741,339 793,125 773,784 Stormwater 7,512,538 5,954,788 5,316,391 4,910,929 4,373,848 Solid waste 3,136,831 1,517,653 1,049,923 1,543,903 729,343 Capital grants and contributions 951,818 2,204,638 2,736,217 418,430 668,917

Total business-type activities program revenues 59,594,746 53,907,983 51,910,463 50,952,690 47,254,886

Total primary government program revenues 98,283,397 86,575,214 83,910,157 85,090,852 82,245,328

continued…

181



2016 2015 2014 2013 2012

Net (expense) revenueGovernmental activities (85,785,715)$ (83,515,600)$ (81,834,074)$ (65,432,867)$ (63,487,120)$ Business-type activities (1,586,766) 5,207,977 8,041,046 6,893,684 6,364,048

Total primary government net expense (87,372,481) (78,307,623) (73,793,028) (58,539,183) (57,123,072)

General revenues and other changes in net positionGovernmental activities:

Taxes:Property taxes, levied for general purposes 53,396,435 51,977,008 50,671,754 49,380,190 48,856,539 Property taxes, levied for designated purpose 18,145,588 17,626,382 17,236,996 16,753,667 15,958,495 Property taxes, levied for debt services 2,340 2,129 2,129 569,490 668,745

State shared revenues and grants (unrestricted) 10,215,633 10,317,088 10,050,793 9,771,731 9,748,477 Investment income 1,558,594 1,262,302 1,621,595 (410,361) 2,567,568 Special item - - - - - Other 320,426 150,905 5,231,878 145,399 3,410,739 Transfers 460,882 4,831,153 3,574,088 3,690,615 2,428,146

Total governmental activities 84,099,898 86,166,967 88,389,233 79,900,731 83,638,709

Business-type activities:Property taxes, levied for general purposes 12,072,979 11,728,679 11,470,474 11,154,045 11,030,550 Investment income 1,774,736 1,293,959 1,241,702 (245,003) 1,188,581 Other 59,650 67,250 (673,069) (504,477) 484,311 Transfers (460,882) (4,831,153) (3,574,088) (3,690,615) (2,428,146)

Total business-type activities 13,446,483 8,258,735 8,465,019 6,713,950 10,275,296 Total primary government 97,546,381 94,425,702 96,854,252 86,614,681 93,914,005

Change in net positionGovernmental activities (1,685,817) 2,651,367 6,555,159 14,467,864 20,151,589 Business-type activities 11,859,717 13,466,712 16,506,065 13,607,634 16,639,344

Total primary government 10,173,900$ 16,118,079$ 23,061,224$ 28,075,498$ 36,790,933$

continued…


Note: In fiscal year 2015, the City adopted GASB Statement No. 68, Accounting and Financial Reporting for Pensions. Prior periods have not been restated for its impact.

182



2011 2010 2009 2008 2007

Net (expense) revenueGovernmental activities (67,008,428)$ (70,675,421)$ (98,178,182)$ (77,517,330)$ (62,558,507)$ Business-type activities 4,914,270 2,649,842 (2,722,951) 368,970 (2,866,758)

Total primary government net expense (62,094,158) (68,025,579) (100,901,133) (77,148,360) (65,425,265)

General revenues and other changes in net positionGovernmental activities:

Taxes:Property taxes, levied for general purposes 58,050,469 60,655,729 60,468,022 60,510,514 48,243,639 Property taxes, levied for designated purpose 7,131,115 7,454,130 - - - Property taxes, levied for debt services 2,265,030 2,274,782 9,526,085 9,555,291 17,236,440

State shared revenues and grants (unrestricted) 9,582,165 9,456,109 11,102,183 11,116,813 11,464,818 Investment income 2,523,944 4,308,095 7,890,239 9,059,668 7,990,673 Special item - - - - - Other 835,982 215,199 375,390 899,577 709,786 Transfers 241,009 4,140,628 1,162,611 2,139,564 (1,276,359)

Total governmental activities 80,629,714 88,504,672 90,524,530 93,281,427 84,368,997

Business-type activities:Property taxes, levied for general purposes 11,171,676 11,677,513 11,529,057 11,550,982 10,998,459 Investment income 515,730 1,545,547 5,443,148 4,493,194 3,861,459 Other - - - - - Transfers (241,009) (4,140,628) (1,162,611) (2,139,564) 1,276,359

Total business-type activities 11,446,397 9,082,432 15,809,594 13,904,612 16,136,277 Total primary government 92,076,111 97,587,104 106,334,124 107,186,039 100,505,274

Change in net positionGovernmental activities 13,621,286 17,829,251 (7,653,652) 15,764,097 21,810,490 Business-type activities 16,360,667 11,732,274 13,086,643 14,273,582 13,269,519

Total primary government 29,981,953$ 29,561,525$ 5,432,991$ 30,037,679$ 35,080,009$

concluded.

183


Fund Balances (Modified Accrual Basis of Accounting)Governmental FundsLast Ten Fiscal Years

2016 2015 2014 2013 2012

General fundReserved -$ -$ -$ -$ -$ Unreserved - - - - - Nonspendable (1) 619,311 765,634 853,930 915,644 960,336 Assigned (1) 9,185,273 4,482,510 7,446,598 810,595 243,308 Unassigned (1) 15,330,765 17,235,156 14,278,680 14,392,854 14,093,650

Total general fund 25,135,349$ 22,483,300$ 22,579,208$ 16,119,093$ 15,297,294$

All other governmental fundsReserved -$ -$ -$ -$ -$ Unreserved, reported in:

Special revenue funds - - - - - Capital projects funds - - - - - Undesignated - - - - -

Nonspendable (1) 1,984,000 1,984,000 1,984,000 1,984,000 1,985,800 Restricted (1) 56,176,316 55,120,246 55,346,228 56,701,167 63,432,711 Committed (1) 4,584,590 3,984,155 3,203,624 6,088,188 4,617,556 Assigned (1) 5,832,928 2,642,775 2,699,330 2,346,846 2,285,397

Total all other governmental funds 68,577,834$ 63,731,176$ 63,233,182$ 67,120,201$ 72,321,464$

continued…


(1) In fiscal year 2011, the City adopted GASB Statement No. 54, Fund Balance Reporting and Governmental Fund TypeDefinitions, which reclassifies fund balance into new reporting categories.

184


Fund Balances (Modified Accrual Basis of Accounting)Governmental FundsLast Ten Fiscal Years

2011 2010 2009 2008 2007

General fundReserved -$ 199,238$ 444,744$ 219,224$ 270,048$ Unreserved - 12,288,378 10,910,841 19,561,545 16,126,413 Nonspendable (1) 1,032,509 - - - - Assigned (1) 2,024,490 - - - - Unassigned (1) 10,525,445 - - - -

Total general fund 13,582,444$ 12,487,616$ 11,355,585$ 19,780,769$ 16,396,461$

All other governmental fundsReserved -$ 19,102,850$ 43,160,630$ 16,289,679$ 14,783,804$ Unreserved, reported in:

Special revenue funds - 67,567,542 64,524,470 64,279,003 70,463,629 Capital projects funds - 38,031,543 2,401,119 3,622,949 - Undesignated - 320,340 - - -

Nonspendable (1) 1,984,000 - - - - Restricted (1) 85,121,367 - - - - Committed (1) - - - - - Assigned (1) 2,251,551 - - - -

Total all other governmental funds 89,356,918$ 125,022,275$ 110,086,219$ 84,191,631$ 85,247,433$

concluded.

185


Changes in Fund Balances (Modified Accrual Basis of Accounting)Governmental FundsLast Ten Fiscal Years

2016 2015 2014 2013 2012Revenues

Taxes 71,544,363$ 69,605,308$ 67,910,079$ 66,692,158$ 65,483,779$ Special assessments/improvement charges - 52,373 44,636 43,102 48,843 Licenses, fees and permits 7,371,840 7,619,826 6,683,485 6,537,092 6,279,934 Federal grants 890,919 1,033,789 1,953,212 3,366,834 1,567,185 State shared revenues and grants 21,858,259 20,792,519 20,428,435 19,916,609 21,367,804 Charges for services 15,515,836 14,034,309 13,732,847 12,050,841 13,721,017 Fines and penalties 4,596,544 4,601,589 4,483,484 4,483,090 4,606,580 Interest and penalties - 211 800 11,189 828 Investment income (loss) 1,190,815 928,186 1,162,205 (305,700) 2,057,540 Rental 634,819 637,366 587,361 653,879 463,191 Contributions and donations 334,247 981,965 521,305 295,289 369,920 Intra-governmental sales 2,627,905 213,511 266,970 157,956 208,243 Miscellaneous 594,470 678,652 1,182,138 1,529,283 719,712

Total revenues 127,160,017 121,179,604 118,956,957 115,431,622 116,894,576


General government 14,257,197 14,501,593 14,372,873 14,659,352 15,034,085 Public safety 47,189,457 45,217,288 43,123,100 42,347,919 43,139,586 Public works 18,863,228 17,869,057 17,789,296 19,015,177 18,969,637 Community and economic development 3,007,207 2,808,976 2,118,053 1,918,460 3,677,716 Culture and recreation 12,072,443 12,567,890 11,360,700 10,142,639 9,996,650 Public transportation 10,038,406 9,735,605 9,494,422 9,233,757 8,913,232

Capital outlay 18,043,661 14,237,971 14,971,769 26,764,896 29,176,152 Debt service:

Principal 4,148,000 4,150,000 7,550,000 4,055,000 3,320,000 Interest 4,080,504 4,920,544 5,072,356 5,045,229 5,117,493

Total expenditures 131,700,103 126,008,924 125,852,569 133,182,429 137,344,551

Revenues over (under)expenditures (4,540,086) (4,829,320) (6,895,612) (17,750,807) (20,449,975)

Other financing sources (uses):Transfers in 21,803,130 13,294,382 15,619,817 10,917,733 9,620,472 Transfers out (9,467,278) (7,679,086) (11,131,060) (6,803,028) (6,519,432) Sale of property and equipment 16,350 3,598 4,979,951 30,563 2,809,085 Issuance of debt 17,710,000 16,235,000 - 9,085,000 2,670,000 Payment to refunded bond escrow agent (18,439,571) (16,486,836) - - (2,714,429) Bond premium (discount) 416,162 (135,652) - 141,075 33,375 Bond issuance costs - - - - -

Total other financing sources (uses) 12,038,793 5,231,406 9,468,708 13,371,343 5,899,071

Net change in fund balances 7,498,707$ 402,086$ 2,573,096$ (4,379,464)$ (14,550,904)$

Debt service as a percentage of noncapital expenditures 8.0% 8.5% 12.0% 9.4% 8.7%

continued…Source: City of Ann Arbor Financial Services, Accounting Services Unit

186


Changes in Fund Balances (Modified Accrual Basis of Accounting)Governmental FundsLast Ten Fiscal Years

2011 2010 2009 2008 2007Revenues

Taxes 67,446,614$ 70,384,641$ 69,994,107$ 70,065,805$ 65,480,079$ Special assessments/improvement charges 103,790 54,713 77,748 182,302 119,198 Licenses, fees and permits 6,125,839 5,108,409 1,133,847 1,284,685 1,210,631 Federal grants 4,950,416 2,583,511 3,434,753 3,470,830 3,801,631 State shared revenues and grants 18,156,777 17,277,839 18,469,118 18,743,579 19,214,610 Charges for services 12,642,161 10,393,128 13,350,572 14,228,315 14,846,082 Fines and penalties 4,863,239 4,138,282 4,963,134 5,874,429 5,894,126 Interest and penalties 516,159 515,190 28,963 30,472 36,551 Investment income (loss) 1,851,927 3,071,842 6,807,477 7,864,379 7,216,882 Rental 421,742 404,147 310,520 335,642 185,173 Contributions and donations 280,971 260,470 228,208 297,087 171,640 Intra-governmental sales 361,245 318,696 188,958 363,457 535,049 Miscellaneous 1,181,503 316,652 375,390 899,577 709,786

Total revenues 118,902,383 114,827,520 119,362,795 123,640,559 119,421,438


General government 14,058,718 16,323,784 22,475,026 16,360,311 14,755,887 Public safety 43,678,573 43,654,317 47,151,174 45,003,004 43,476,726 Public works 17,617,067 16,353,447 15,037,630 15,946,677 19,564,728 Community and economic development 3,863,957 4,014,989 5,243,807 5,610,030 5,059,096 Culture and recreation 9,653,540 7,498,717 8,462,253 7,955,698 6,153,578 Public transportation 10,106,607 9,682,798 9,592,129 9,574,677 9,169,355

Capital outlay 46,974,519 49,765,312 18,102,248 16,661,477 31,209,188 Debt service:

Principal 3,410,000 3,345,000 3,270,000 3,175,000 3,405,000 Interest 5,302,317 2,773,143 2,934,523 2,586,455 2,422,079

Total expenditures 154,665,298 153,411,507 132,268,790 122,873,329 135,215,637

Revenues over (under)expenditures (35,762,915) (38,583,987) (12,905,995) 767,230 (15,794,199)

Other financing sources (uses):Transfers in 7,170,739 11,227,633 13,104,036 8,879,908 9,362,022 Transfers out (6,023,714) (5,914,937) (10,513,218) (7,334,089) (10,627,817) Sale of property and equipment 45,361 13,855 312,501 15,457 33,837 Issuance of debt - 49,420,000 27,660,000 - - Payment to refunded bond escrow agent - - - - - Bond premium (discount) - (93,674) - - - Bond issuance costs - - (187,920) - -

Total other financing sources (uses) 1,192,386 54,652,877 30,375,399 1,561,276 (1,231,958)

Net change in fund balances (34,570,529)$ 16,068,890$ 17,469,404$ 2,328,506$ (17,026,157)$

Debt service as a percentage of noncapital expenditures 8.8% 6.4% 5.7% 5.8% 6.2%

concluded.

187


Taxable Value of PropertyLast Ten Fiscal Years

Less: Total Real Personal Tax-exempt Total Taxable Direct Tax

Property Property Property (4) Value Rate

2007 4,227,329,588$ 254,272,500$ -$ 4,481,602,088$ 16.66052008 4,469,676,977 266,530,700 - 4,736,207,677 16.78252009 4,577,802,604 309,165,535 - 4,886,968,139 16.78072010 4,595,490,848 263,449,000 - 4,858,939,848 16.79702011 4,447,791,127 220,760,700 - 4,668,551,827 16.81642012 4,422,577,957 212,313,200 - 4,634,891,157 16.46602013 4,473,471,542 209,747,000 - 4,683,218,542 16.57202014 4,614,295,892 225,575,000 - 4,839,870,892 16.45012015 4,739,348,866 230,309,300 - 4,969,658,166 16.45012016 4,870,231,067 240,179,600 - 5,110,410,667 16.4436

Notes:

(1)

(2)

(3) For the Industrial Facilities tax roll, the millage rate is 50% of the normal millage rate.

(4) As Tax Exempt Property has a zero dollar value, no value is listed.

Source: City of Ann Arbor Financial Services, Assessing Unit

Fiscal

Taxable property in the City is assessed by the City Assessor and is subject to review by the County Board ofEqualization. Tax levies on property in Michigan are applied against the taxable value of all property.Current statutes require assessments to be 50% of the true cash value of both personal and real property forequalization purposes.

In accordance with Act 409, Public Acts of Michigan, 1965, and Article 9, Section 2 of the MichiganConstitution, as amended by Joint Resolution S on March 15, 1994, state equalized value shall not exceed50% of the true cash value. With the passage of Proposal "A", another value is required on each property.The new value is termed "taxable value". Increases in taxable value are limited to 5%, the Consumer PriceIndex, or State Equalized Value, whichever is less.

June 30,Year Ended

188


Direct and Overlapping Property Tax Rates (per $1,000 of taxable value)Last Ten Fiscal Years

Fiscal General Refuse Transpor- EmployeeYear Operating Collection tation* Benefits

Principal Residence Exemption (PRE) 2007 6.1856 2.4740 2.0618 2.0618Non-PRE 2007 6.1856 2.4740 2.0618 2.0618Principal Residence Exemption (PRE) 2008 6.1682 2.4670 2.0560 2.0560Non-PRE 2008 6.1682 2.4670 2.0560 2.0560Principal Residence Exemption (PRE) 2009 6.1682 2.4670 2.0560 2.0560Non-PRE 2009 6.1682 2.4670 2.0560 2.0560Principal Residence Exemption (PRE) 2010 6.1682 2.4670 2.0560 2.0560Non-PRE 2010 6.1682 2.4670 2.0560 2.0560Principal Residence Exemption (PRE) 2011 6.1682 2.4670 2.0560 2.0560Non-PRE 2011 6.1682 2.4670 2.0560 2.0560Principal Residence Exemption (PRE) 2012 6.1682 2.4670 2.0560 2.0560Non-PRE 2012 6.1682 2.4670 2.0560 2.0560Principal Residence Exemption (PRE) 2013 6.1682 2.4670 2.0560 2.0560Non-PRE 2013 6.1682 2.4670 2.0560 2.0560Principal Residence Exemption (PRE) 2014 6.1682 2.4670 2.0560 2.0560Non-PRE 2014 6.1682 2.4670 2.0560 2.0560Principal Residence Exemption (PRE) 2015 6.1682 2.4670 2.0560 2.0560Non-PRE 2015 6.1682 2.4670 2.0560 2.0560Principal Residence Exemption (PRE) 2016 6.1657 2.4660 2.0552 2.0552Non-PRE 2016 6.1657 2.4660 2.0552 2.0552

continued…* Represents millage collected for Ann Arbor Area Transportation Authority.

**


Includes Washtenaw Intermediate School Ann Arbor District millage of 3.9745 mills and State Education Tax of 6.0 mills on both Principal Residence and Non-Principal Residence properties. On Non-Principal Residence properties, an additional 13.4656 mills is included for School Operating Tax.

City of Ann Arbor Direct Rate

189



Major TotalDebt Street Direct Tax

Service Parks Repair Rate

Principal Residence Exemption (PRE) 0.5454 1.3937 1.9382 16.6605Non-PRE 0.5454 1.3937 1.9382 16.6605Principal Residence Exemption (PRE) 0.4661 1.5748 1.9944 16.7825Non-PRE 0.4661 1.5748 1.9944 16.7825Principal Residence Exemption (PRE) 0.4643 1.5748 1.9944 16.7807Non-PRE 0.4643 1.5748 1.9944 16.7807Principal Residence Exemption (PRE) 0.4806 1.5748 1.9944 16.7970Non-PRE 0.4806 1.5748 1.9944 16.7970Principal Residence Exemption (PRE) 0.5000 1.5748 1.9944 16.8164Non-PRE 0.5000 1.5748 1.9944 16.8164Principal Residence Exemption (PRE) 0.1496 1.5748 1.9944 16.4660Non-PRE 0.1496 1.5748 1.9944 16.4660Principal Residence Exemption (PRE) 0.1250 1.5748 2.1250 16.5720Non-PRE 0.1250 1.5748 2.1250 16.5720Principal Residence Exemption (PRE) 0.0000 1.5779 2.1250 16.4501Non-PRE 0.0000 1.5779 2.1250 16.4501Principal Residence Exemption (PRE) 0.0000 1.5779 2.1250 16.4501Non-PRE 0.0000 1.5779 2.1250 16.4501Principal Residence Exemption (PRE) 0.0000 1.5773 2.1242 16.4436Non-PRE 0.0000 1.5773 2.1242 16.4436

continued…

City of Ann Arbor Direct Rate

190



Ann Arbor Ann Arbor Ann Arbor WashtenawPublic Public District Washtenaw Community

Schools** Schools** Library County College Total

Principal Residence Exemption (PRE) 18.2226 1.9214 5.6768 3.7082 46.1895Non-PRE 31.2154 1.9214 5.6768 3.7082 59.1823Principal Residence Exemption (PRE) 17.9610 1.9214 5.6768 3.6956 46.0373Non-PRE 31.2072 1.9214 5.6768 3.6956 59.2835Principal Residence Exemption (PRE) 17.5203 1.9214 5.7018 3.6856 45.6098Non-PRE 31.2040 1.9214 5.7018 3.6856 59.2935Principal Residence Exemption (PRE) 17.4132 1.5500 5.7418 3.6856 45.1876Non-PRE 30.9625 1.5500 5.7418 3.6856 58.7369Principal Residence Exemption (PRE) 17.6315 1.5500 5.7448 3.6856 45.4283Non-PRE 31.0971 1.5500 5.7448 3.6856 58.8939Principal Residence Exemption (PRE) 18.1329 1.5500 5.7518 3.6376 45.5383Non-PRE 31.4245 1.5500 5.7518 3.6376 58.8299Principal Residence Exemption (PRE) 18.1329 1.5500 5.7654 3.6376 45.6579Non-PRE 31.4245 1.5500 5.7654 3.6376 58.9495Principal Residence Exemption (PRE) 17.7937 1.5500 5.7801 3.4576 45.0315Non-PRE 31.4245 1.5500 5.7801 3.4576 58.6623Principal Residence Exemption (PRE) 0.7000 17.9172 1.5500 6.2838 3.4576 46.3587Non-PRE 0.7000 31.4245 1.5500 6.2838 3.4576 59.8660Principal Residence Exemption (PRE) 0.7000 17.7692 1.6500 6.3058 3.4576 46.3262Non-PRE 0.7000 31.3913 1.6500 6.3058 3.4576 59.9483

concluded.

Overlapping Rates

191


Principal Property TaxpayersCurrent Year and Nine Years Ago

Percentageof Total City

Taxable AssessedType of Business Value Rank Value

Briarwood Shopping Complex Shopping Center 39,381,400$ 1 0.79%Campus Investors 601 Forest Apartments 31,079,300 2 0.63%AMCAP Arborland LLC Shopping Center 30,312,911 3 0.61%DTE Electric Company Utility 30,175,100 4 0.61%Ann Arbor Campus Housing, LLC Apartments 28,575,329 5 0.57%HUB Eisenhower Property Office Building 25,290,272 6 0.51%THC Ann Arbor WP LLC Apartments 19,145,458 7 0.39%Varsity at Ann Arbor, LLC Apartments 19,054,037 8 0.38%DTE Gas Company Utility 18,437,700 9 0.37%Sterling - 4 Eleven, LP Apartments 15,744,500 10 0.32%Geddes Lake Cooperative Co-op Housing Pfizer PharmaceuticalsWindemere I Ltd Partnership Apartments McKinley Associates ApartmentsGreat Lakes Reit LP Apartments & OfficeVillage Cooperative Co-op Housing

Total 257,196,007$ 5.18%

continued…


Taxpayer

2016

192


Principal Property TaxpayersCurrent Year and Nine Years Ago

Percentageof Total City

Taxable AssessedType of Business Value Rank Value

Briarwood Shopping Complex Shopping Center 38,891,632$ 2 0.87%Campus Investors 601 Forest Apartments AMCAP Arborland LLC Shopping Center 29,604,200 4 0.66%DTE Electric Company Utility 33,044,692 3 0.74%Ann Arbor Campus Housing, LLC ApartmentsHUB Eisenhower Property Office BuildingTHC Ann Arbor WP LLC Apartments Varsity at Ann Arbor, LLC Apartments DTE Gas Company Utility 14,085,700 10 0.31%Sterling - 4 Eleven, LP Apartments Geddes Lake Cooperative Co-op Housing 18,794,447 6 0.42%Pfizer Pharmaceuticals 222,976,534 1 4.98%Windemere I Ltd Partnership Apartments 17,520,000 7 0.39%McKinley Associates Apartments 16,599,036 8 0.37%Great Lakes Reit LP Apartments & Office 20,874,300 5 0.47%Village Cooperative Co-op Housing 14,773,312 9 0.33%

Total 427,163,853$ 9.53%

concluded.

2007

Taxpayer

193


194


Property Tax Levies and CollectionsLast Ten Fiscal Years

Percentage PercentageAmount of Levy Amounts of Levy

2007 75,429,967$ 73,974,415$ 98.07% 1,330,101$ 125,204$ 75,429,720$ 100.00%2008 80,126,988 78,036,023 97.39% 1,986,130 103,838 80,125,991 100.00%2009 81,928,011 79,444,679 96.97% 2,377,225 102,499 81,924,403 100.00%2010 81,663,316 79,228,933 97.02% 2,317,119 112,125 81,658,177 99.99%2011 78,565,863 76,336,483 97.16% 2,121,931 72,399 78,530,813 99.96%2012 75,840,849 74,102,021 97.71% 1,651,831 54,941 75,808,793 99.96%2013 77,169,289 76,009,075 98.50% 1,055,445 61,834 77,126,354 99.94%2014 79,385,502 78,341,354 98.68% 925,652 58,444 79,325,450 99.92%2015 81,742,181 80,666,319 98.68% 819,344 201,543 81,687,206 99.93%2016 83,995,895 83,115,705 98.95% 733,314 39,152 83,888,171 99.87%

Source: City of Ann Arbor Financial Services, Treasury Unit (Revised format 2011)

Collected within theFiscal Year of the Levy Total Collections to Date

Fiscal Year Ended June 30

Taxes Levied for the Fiscal

Year*

Collections in Subsequent

Years (Real)

Collections in Subsequent

Years (Personal)

Ad valorem taxes are levied July 1st annually, and are due July 31st. Delinquent real property taxes are turned over to the Countyfor collection the following March 1st. The County pays all its municipalities from a revolving fund for delinquent real propertytaxes. Delinquent personal property taxes are negligible.

* Adjusted tax roll for City millages only at time of settlement with the County. Figures include DDA capture of City taxes andexcludes administrative fees and interest.

195


Ratios of Outstanding Debt by Type (Dollars in thousands except for per capita)Last Ten Fiscal Years

General Special Installment General Lease [1] OtherObligation Assessment Purchase Obligation Contract Revenue Long-term

Bonds Bonds Agreement Bonds Payable Bonds Debt

2007 57,190$ 805$ 3,500$ 29,672$ -$ 62,040$ 5,734$ 2008 54,140 680 3,911 27,510 - 105,160 6,4312009 78,655 555 3,500 25,295 - 99,855 6,3602010 124,855 430 3,500 23,365 - 94,215 9,4452011 121,565 310 3,500 21,315 - 98,412 12,3172012 118,053 220 3,500 19,190 - 102,180 1,4702013 122,752 140 4,060 16,965 86 106,572 35,9812014 119,725 60 - 14,550 192 128,643 9,9322015 115,624 35 - 12,140 106 159,195 13,8272016 111,919 15 - 9,855 63 177,852 14,721

continued…


[1] Includes State revolving loan fund debt which is payable from enterprise fund revenues.

Governmental Activities Business-type Activities

Fiscal Year

Note: For fiscal year 2015 and 2016 percent of personal income, the divisor used was for 2014 since 2015 and 2016personal income is not available at this time.

196


Ratios of Outstanding Debt by Type (Dollars in thousands except for per capita)Last Ten Fiscal Years

Total PercentagePrimary of Personal Per

Government Income Capita

2007 158,941$ 1.17% 1,391$ 2008 197,832 1.44% 1,731 2009 214,220 1.63% 1,869 2010 255,810 1.90% 2,267 2011 257,419 1.81% 2,259 2012 244,613 1.61% 2,147 2013 286,556 1.84% 2,515 2014 273,102 1.58% 2,397 2015 300,927 1.74% 2,641 2016 314,425 1.82% 2,760

concluded.

Fiscal Year

197


Ratios of Net General Bonded Debt Outstanding (Dollars in thousands except for per capita)Last Ten Fiscal Years

Governmental Business-type Less:Activities Activities Total Amounts Percentage of General General General Restricted Less: Net Actual Taxable

Obligation Obligation Bonded Debt to Repaying Self-supported General Value of PerBonds Bonds Outstanding Principal Portion Bonded Debt Property Capita

2007 57,190$ 29,672$ 86,862$ (1,271)$ (805)$ 84,786$ 1.89% 741.90$ 2008 54,140 27,510 81,650 (1,268) (680) 79,702 1.68% 697.42 2009 78,655 25,295 103,950 (1,248) (555) 102,147 2.09% 891.32 2010 124,855 23,365 148,220 (1,324) (430) 146,466 3.01% 1,297.86 2011 121,565 21,315 142,880 (1,516) (310) 141,054 3.02% 1,238.05 2012 118,053 19,190 137,243 (1,318) (220) 135,705 2.93% 1,191.08 2013 122,752 16,965 139,717 (1,243) (140) 138,334 2.95% 1,214.16 2014 119,725 14,550 134,275 (1,142) (60) 133,073 2.75% 1,167.98 2015 115,624 12,140 127,764 (1,123) (35) 126,606 2.55% 1,111.22 2016 111,919 9,855 121,774 (1,087) (15) 120,672 2.36% 1,059.14

Note: Details regarding the city's outstanding debt can be found in the notes to the financial statements.


FiscalYear

198


Direct and Overlapping Governmental Activities Debt(dollars in thousands)As of June 30, 2016

EstimatedNet Estimated Share ofDebt Percentage Overlapping

Outstanding Applicable Debt

Direct debtGeneral obligation bonds 111,919$ 100.00% 111,919$ Special assessment bonds 15 100.00% 15

Total city direct debt 111,934$ 111,934

Overlapping debtAnn Arbor School District 183,510$ 63.28% 116,125 Washtenaw Community College 13,580 35.07% 4,763 Washtenaw County, at large 36,981 34.24% 12,662

Total overlapping debt 234,071$ 133,550

Total direct & overlapping debt 245,484$


Overlapping Debt – The issuer's proportionate share of the debt of other local governmental units that eitheroverlap it (the issuer is located either wholly or partly within the geographic limits of the other units) orunderlie it (the other units are located within the geographic limits of the issuer). The debt is generallyapportioned based upon relative Assessed Values.

The Assessed Values is the appraised worth of a property as set by a taxing authority for purposes of ad valoremtaxation. The method of establishing assessed valuation varies from state to state. For example, in certainjurisdictions the assessed valuation is equal to the full or market value of the property; in other jurisdictions theassessed valuation is equal to a set percentage of full or market value.

Government Unit

199


Legal Debt Margin InformationLast Ten Fiscal Years

Legal Debt Margin Calculation for Fiscal Year 2016

Assessed value of real and personal property 6,118,573,700$

Debt limit (10% of assessed value) 611,857,370$ Debt applicable to limit:

Net direct debt 111,934,000 Less: special assessment bonds (general obligation portion) (15,000) Total net debt applicable to limit 111,919,000

Legal debt margin 499,938,370$

TotalNet Debt

Total ApplicableNet Debt to Limit as a

Debt Applicable Legal Percentage ofLimit to Limit Debt Margin Debt Limit

2007 588,230,120$ 56,724,615$ 531,505,505$ 9.64%2008 604,890,062 56,724,615 548,165,447 9.38%2009 607,716,850 80,146,618 527,570,232 13.19%2010 587,631,660 125,415,000 462,216,660 21.34%

549,528,970 120,935,000 428,593,970 22.01%2012 526,820,590 121,015,000 405,805,590 22.97%2013 529,497,464 127,272,000 402,225,464 24.04%2014 548,205,147 119,588,000 428,617,147 21.81%2015 544,734,050 115,624,000 429,110,050 21.23%2016 611,857,370 111,919,000 499,938,370 18.29%


2011

200


Pledged-revenue Coverage Last Ten Fiscal Years

Operating OperatingRevenue (1) Expenses (2) Principal Interest Total Coverage

Water Supply System:2007 19,645,050$ 12,815,434$ 6,829,616$ 3,085,000$ 1,311,200$ 4,396,200$ 1.62008 20,878,987 13,227,385 7,651,602 3,175,000 1,201,181 4,376,181 1.72009 19,228,211 14,442,403 4,785,808 3,710,000 2,004,487 5,714,487 0.82010 20,386,564 12,440,872 7,945,692 3,870,000 1,890,994 5,760,994 1.42011 21,364,070 13,058,877 8,305,193 4,045,000 1,738,552 5,783,552 1.42012 22,301,008 12,562,435 9,738,573 4,584,250 1,669,928 6,254,178 1.62013 23,688,293 12,850,446 10,837,847 3,123,721 1,106,529 4,230,250 2.62014 23,018,747 12,839,906 10,178,841 2,695,000 1,137,321 3,832,321 2.72015 22,948,029 13,933,617 9,014,412 2,410,000 1,262,901 3,672,901 2.52016 24,338,900 14,787,496 9,551,404 3,400,000 1,257,924 4,657,924 2.1

Sewage Disposal System:2007 21,168,920$ 11,400,323$ 9,768,597$ 1,495,000$ 1,166,739$ 2,661,739$ 3.72008 22,263,810 10,571,368 11,692,442 1,490,000 1,110,639 2,600,639 4.52009 22,752,472 11,185,369 11,567,103 1,450,000 1,763,808 3,213,808 3.62010 19,851,400 10,306,331 9,545,069 2,040,000 2,054,391 4,094,391 2.32011 21,810,673 10,120,854 11,689,819 2,355,000 1,990,078 4,345,078 2.72012 21,593,098 10,177,877 11,415,221 2,696,000 1,851,394 4,547,394 2.52013 21,377,410 10,585,422 10,791,988 2,688,460 1,772,419 4,460,879 2.42014 23,200,087 10,713,655 12,486,432 2,305,000 1,416,666 3,721,666 3.42015 22,878,298 11,484,606 11,393,692 2,225,000 2,658,665 4,883,665 2.32016 25,025,056 12,431,392 12,593,664 2,995,000 3,145,865 6,140,865 2.1

Stormwater Sewer System (3):2007 4,564,942$ 2,261,839$ 2,303,103$ 130,000$ 22,802$ 152,802$ 15.12008 5,176,719 2,701,223 2,475,496 140,000 15,588 155,588 15.92009 5,517,486 2,501,139 3,016,347 145,000 7,643 152,643 19.8

(1) Includes investment income (loss); revenue pledged is covered by charges for services.(2) Excludes depreciation expense.(3) 2009 was the final year of debt service for stormwater bonds.


Debt Service

Fiscal Year

Net Revenue Available For Debt Service

201


Demographic and Economic StatisticsLast Ten Calendar Years

Per Capita EducationPersonal Personal Median Level in Years School Unemployment

Population (1) income (2) Income (2) Age (1) of Schooling (1) Enrollment (3) Rate % (4)

2007 114,282 13,614,000$ 39,142$ 27 17 16,680 5.22008 114,282 13,766,000 39,107 27 17 17,012 6.32009 114,602 13,159,000 38,032 27 17 16,539 8.32010 112,852 13,496,000 39,085 28 17 16,536 8.12011 113,932 14,204,286 40,821 28 17 16,440 6.52012 113,934 15,161,590 43,202 28 17 16,544 8.62013 113,934 15,560,767 43,927 28 17 16,545 6.82014 113,934 17,260,080 48,365 28 17 16,588 5.72015 113,934 N/A N/A 28 17 16,901 4.22016 113,934 N/A N/A 28 17 16,815 3.5

Sources:

(1) U. S. Census Bureau

(2) Bureau of Economic Analysis, Ann Arbor Metropolitan Statistical Area, CA04 Personal Income and Employment Summaryhttp://www.bea.gov/*Note: 2015 & 2016 data has not been released at this time.

(3) Ann Arbor Public School's Enrollment Office.http://www.a2schools.org/site/Default.aspx?PageID=6908

(4) Michigan Employment Security Commission statistics for Washtenaw County.http://stats.bls.gov/eag/eag.mi_annarbor_msa.htm

Year

202


Principal Employers Current Year and Nine Years Ago

Employees Rank Percentage Employees Rank Percentage

University of Michigan 30,032 1 65.01% 29,165 1 46.38%Trinity Health System (formerly St.

Joseph's Health System) 5,317 2 11.51% 5,077 3 8.07%U.S. Government 3,125 3 6.76% 1,230 8 1.96%Ann Arbor Public Schools 2,500 4 5.41% 3,000 4 4.77%Washtenaw County 1,252 5 2.71% 1,200 9 1.91%Integrated Health Associates, Inc. 1,240 6 2.68%Truven Health Analytics 780 7 1.69%City of Ann Arbor 722 8 1.56% 822 10 1.31%Domino's Pizza 668 9 1.45%Washtenaw Community College 561 10 1.21% 1,500 6 2.39%Univ. of Mich Hospitals & Health System 17,057 2 27.13%Pfizer Inc. 2,500 5 3.98%Borders Group, Inc. 1,330 7 2.12%

Total 46,197 100.00% 62,881 100.00%

Taxpayer

2016 2007

Source: Crain's Detroit Business, Vol. 31, No. 52, 2015 Edition, 2015 Book of Lists. Ann Arbor Business Review (Prime Numbers: top 100 Employers, January's Edition) for 2007

203


Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years

Function/Program 2016 2015 2014 2013 2012

General government

Financial Services 61 61 61 48 45 Community Services 59 57 34 32 34 Parks & Recreation 24 24 24 20 20 City Administrator Services 34 34 34 31 30 Mayor & Council 1 1 1 1 1 Other

Police Officers 122 122 119 118 118 Civilians 27 27 27 28 46

Fire Firefighters & Officers 86 86 85 81 81 Civilians 1 1 1 1 1

Public Services Project Management 16 12 12 13 13 Water 26 26 26 26 26 Wastewater Treatment 35 35 35 35 35 Field Operations 117 120 120 124 126 Other 59 61 61 74 74

15th District Court 34 34 34 34 36Retirement System 4 4 4 4 4Downtown Development Authority 4 4 4 4 4City Attorney 12 12 12 12 13

Total 722 721 694 686 706

continued…


204


Full-Time Equivalent City Government Employees by Function/Program Last Ten Fiscal Years

Function/Program 2011 2010 2009 2008 2007

General government

Financial Services 48 49 49 51 50 Community Services 33 35 35 42 41 Parks & Recreation 20 19 17 21 23 City Administrator Services 31 31 29 32 31 Mayor & Council 1 1 1 1 1 Other

Police Officers 150 152 152 160 159 Civilians 27 30 30 50 67

Fire Firefighters & Officers 89 94 94 94 94 Civilians

Public Services Project Management 15 15 15 17 16 Water 26 26 23 26 24 Wastewater Treatment 35 35 34 35 34 Field Operations 129 135 125 125 128 Other 75 79 93 87 92

15th District Court 37 39 39 41 41Retirement System 4 4 4 4 4Downtown Development Authority 3 3 3 3 3City Attorney 13 14 14 14 14

Total 736 761 800 803 822

concluded.

205


Operating Indicators by Function/ProgramCurrent and Last Eight Fiscal Years

2016 2015 2014 2013 2012

Police Physical arrests 1,542 1,461 1,462 2,395 2,610 Parking violations 118,041 108,759 92,184 87,898 95,990 Traffic violations 12,548 12,205 14,053 14,676 10,638Fire Emergency responses 6,947 6,572 6,646 6,180 5,843 Fire extinguished 259 220 283 418 431 Inspections 1,339 1,218 1,164 1,769 1,962Refuse collection Refuse collected (tons/day) 72.52 72.87 72.84 72.30 71.25 Recyclables collected (tons/day) 40.31 40.17 39.54 38.13 37.10Other public works Street resurfacing (miles) 13.60 8.32 5.41 6.60 6.20 Potholes repaired (tons) 482.32 570.92 636.50 359.35 392.78Parks and recreation Athletic field permits issued 733 866 929 956 1,032 Community center admissions 12,500 12,000 12,000 11,500 11,500Water Connections 28,452 28,418 28,387 28,376 28,333 Water main breaks 65 91 120 102 72 Average daily consumption 13.824 13.576 14.091 14.870 14.600 (millions of gallons) Peak daily consumption 20.131 19.174 23.120 28.100 27.115 (millions of gallons)Wastewater Average daily sewage treatment 16.810 16.999 17.758 16.700 18.100 (millions of gallons)

continued…Source: Various services areas within City of Ann Arbor

Function/Program

206


Operating Indicators by Function/ProgramCurrent and Last Eight Fiscal Years

2011 2010 2009 2008

Police Physical arrests 2,630 1,605 2,000 1,685 Parking violations 86,780 137,271 157,668 167,102 Traffic violations 16,729 NA 23,764 22,893Fire Emergency responses 5,808 4,985 6,045 5,996 Fire extinguished 281 226 258 265 Inspections 913 508 21 471Refuse collection Refuse collected (tons/day) NA NA NA NA Recyclables collected (tons/day) 30.82 31.00 34.00 10.00Other public works Street resurfacing (miles) 4.72 6.92 4.92 4.34 Potholes repaired (tons) 500.00 394.60 423.70 444.34Parks and recreation Athletic field permits issued 1,067 893 839 814 Community center admissions 11,500 11,000 10,500 10,168Water Connections 28,266 28,202 28,222 28,193 Water main breaks 96 85 58 110 Average daily consumption 13.782 12.699 12.675 12.800 (millions of gallons) Peak daily consumption 21.415 17.927 20.775 22.510 (millions of gallons)Wastewater Average daily sewage treatment 17.680 17.745 18.347 18.000 (millions of gallons)

concluded.

Function/Program

207


Capital Asset Statistics by Function/ProgramLast Ten Fiscal Years

2016 2015 2014 2013 2012

Police Station 1 1 1 1 1 Zone offices 2 2 2 2 2 Patrol units 35 35 37 36 36Fire Stations 5 5 5 5 5

Refuse collection Collection trucks 26 27 27 27 26

Other public works Streets (miles) 296.83 296.83 296.83 297.00 295.13 Streetlights 7,562 7,497 7,194 7,194 7,139 Traffic signals 159 159 158 158 158

Parks and recreation Acreage 2,154 2,118 2,118 2,095 2,089 Playgrounds 79 77 77 77 77 Baseball/softball diamonds 34 34 34 34 34 Soccer/football fields 24 24 24 24 24 Community centers 2 2 2 2 2

Water Water mains (miles) 455 488 490 501 464 Fire hydrants 3,178 3,741 3,733 3,711 2,960 Storage capacity (thousands of gallons) 19,000 19,000 19,000 19,000 19,000 Wastewater Sanitary sewers (miles) 366 362 362 369 364 Storm sewers (miles) 294 266 264 264 322 Treatment capacity (thousands of gallons) 48,000 48,000 48,000 48,000 48,000

continued…Source: Various services areas within City of Ann Arbor

Function/Program

Fiscal Year

208


Capital Asset Statistics by Function/ProgramLast Ten Fiscal Years

2011 2010 2009 2008 2007

Police Station 1 1 1 1 1 Zone offices 2 2 2 2 2 Patrol units 37 35 36 36 34Fire Stations 5 5 5 5 5

Refuse collection Collection trucks 27 28 18 18 14

Other public works Streets (miles) 295.13 295.13 295.13 295.13 295.13 Streetlights 7,134 7,134 7,134 7,134 7,134 Traffic signals 158 158 158 158 154

Parks and recreation Acreage 2,089 2,088 2,088 2,088 2,069 Playgrounds 77 73 73 85 78 Baseball/softball diamonds 34 34 34 34 34 Soccer/football fields 24 25 25 25 25 Community centers 2 2 2 2 2

Water Water mains (miles) 472 485 485 490 481 Fire hydrants 2,909 3,555 3,555 3,549 3,510 Storage capacity (thousands of gallons) 19,000 19,000 19,000 19,000 19,000 Wastewater Sanitary sewers (miles) 364 405 405 407 402 Storm sewers (miles) 320 413 413 388 368 Treatment capacity (thousands of gallons) 48,000 50,000 50,000 50,000 50,000

concluded.

Function/Program

Fiscal Year

209


210

Documents

City of Ann Arbor, Comprehensive Year Ended June 30, 2016 · Top 15 2016 Best Public High Schools in Michigan (Huron No. 7, Community No. 8, Skyline No. 10, Pioneer No. 12), k.12niche.com